Abstract
Risk aversion is intuitively connected to the risk premium, which is the difference between the expected value and the certainty equivalent. The certainty equivalent is described by the preference function, which associates to every act a certain consequence indifferent to it according to the agent’s preferences. The expected value is determined once the probabilities of the events and the correspondent consequences are known.
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© 1994 Springer Science+Business Media Dordrecht
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Montesano, A. (1994). Non-Additive Probabilities and the Measure of Uncertainty and Risk Aversion: A Proposal. In: Munier, B., Machina, M.J. (eds) Models and Experiments in Risk and Rationality. Theory and Decision Library, vol 29. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-2298-8_4
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DOI: https://doi.org/10.1007/978-94-017-2298-8_4
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