Question
In: Economics
What are the three attitudes towards risk and how are they each defined?
What are the three attitudes towards risk and how are they each defined?
Solutions
Expert Solution
three attitudes towards risk are risk neutral, risk averse, risk seeker are 3 risk attitudes.
Risk neutral:-
When its risk preference lies in between these two extremes battery is risk seeker and risk averse risk neutral individuals will not pay extra to have the risk transferred to someone else 9 will they pay to engage in a risky endeavour.
Risk averse:- when they Shy away from risks and prefer to have as much security and fraternity as is responsible affordable in order to lower their discomfort level.they would be willing to pay extra to have the security of knowing that unemployment risk would be removed from their lives.
Risk seeker:- rithika is not simply the person who hope to maximize the value of retirement investment by investing the stock market. Are speaker is a someone who will enter into an endeavour as long as a positive long-run return on the money is possible however unlikely.
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