risk aversion
Let an agent explain risk aversion and its measures, describe how it is estimated and used, relate it to behavioural findings, and provide general information without personal financial advice.
Research draft, second pass
A second pass drafted this model: the structure a model of this thing needs, and what is known about it in the world. The line under this one says how the second half was obtained - researched against sources, or recalled without web access, in which case nothing here was read anywhere and every claim is a lead to verify. Unreviewed either way.
Researched by: Claude
Bundle → Layer → Finding → Questions Filled
4 bundles · 8 layers · 8 findings · 16 questions
Concept What risk aversion is.
Definition
Definition and utility.
Definition
Definition.
- How is risk aversion defined through expected utility and concave utility functions? definition
- How do risk aversion, risk neutrality and risk seeking differ? definition
Measures
Measures.
Measures
Measures.
- What are the Arrow-Pratt measures of absolute and relative risk aversion, and what is hyperbolic absolute risk aversion? definition
- How are they computed for a given utility function? action
Estimate Measuring preferences.
Methods
Elicitation methods.
Methods
Methods.
- How is risk aversion estimated from choices, surveys and market data? provenance
- How stable is it across contexts? boundary
Behaviour
Behavioural findings.
Behaviour
Behaviour.
- How do prospect theory, loss aversion and framing modify the standard picture, according to research? provenance
- Which findings are contested? boundary
Apply Uses.
Finance
Finance and insurance.
Finance
Finance.
- How is risk aversion used in portfolio theory, insurance demand and risk profiling by regulated advisers? provenance
- Is the user seeking personal investment advice, which needs a licensed adviser? boundary
Policy
Policy and organisations.
Policy
Policy.
- How does risk aversion inform public policy, safety regulation and organisational risk appetite? provenance
- How do organisations state risk appetite? provenance
Learn Teaching.
Teach
Teaching risk aversion.
Teach
Teaching.
- How can risk aversion be taught with lotteries and utility curves? action
- Which misconceptions arise? provenance
History
History.
History
History.
- How did the concept develop from Bernoulli to Arrow and Pratt and to behavioural economics? provenance
- Which references are standard? provenance
Classifiers Filled
- Family
- Thing Registry
- Category
- Cross-cutting context
- Entry kind
- thing
- Plane
- XCT
- Domain
- XCT.QTY
- Also called
- Hyperbolic absolute risk aversion
What it is Filled
The tendency of a person or organisation to prefer a certain outcome over a risky one with the same or higher expected value, formalised in economics and decision theory through utility functions and measures such as absolute and relative risk aversion, including hyperbolic absolute risk aversion; risk aversion shapes insurance, investment, negotiation and policy choices.
Why it exists Filled
Let an agent explain risk aversion and its measures, describe how it is estimated and used, relate it to behavioural findings, and provide general information without personal financial advice.
Distinguishing features Filled
- Preference over uncertainty
- Utility-based
- Measurable
- Decision-relevant
What robots and AI may and may not do Filled
Must not
- Give personal investment advice based on a person's risk aversion.
- Confuse risk aversion with loss aversion.
- Use a person's measured risk preferences to manipulate them into products.
- Present a single measure as a complete picture of a person's preferences.
Only with a human decision
- Investment, insurance or pension decisions for a person.
May
- Explain risk aversion and its measures, citing economics and decision theory.
- Help a person describe their own risk preferences before they seek advice.
Moral aspects Filled
- Risk profiles are used to sell products, sometimes against people's interests.
- Attitudes to risk differ by wealth and circumstance; judging them is unfair.
Who is affected
- Investors and savers
- Insurance customers
- Students
Owners Filled
Steward
Nobody: a concept of economics held in common.
Links to other meta-models Filled
parent
- Q13631330 - registry parent class
- Q2822674 - registry parent class
related
- risk appetite - category
- aversion - category
- liquid assets - portfolio choices
- nondiscretionary trust - investment vehicles
What else AI and robots need to interact with it Filled
Identity and identifiers required Filled
- Vercy registry: vr.tr.risk-aversion
- Wikidata: Q1426675 (https://www.wikidata.org/wiki/Q1426675)
Direct properties not applicable Not applicable
Not applicable
Plane XCT: no invented physical properties.
Recognition optional Filled
- Prefers certainty over equal-expected-value gambles
- Concave utility
- Risk seeking and risk neutrality are alternatives
- Not physical; a preference pattern.
Capabilities and actions required Filled
- explain risk aversion and its measures
- describe estimation and uses
- relate to behavioural economics
- avoid personal advice
Hazards and failure modes required Filled
- Confusing risk aversion with loss aversion
- Mismeasuring preferences
- Agents giving personal investment advice
Standards and interfaces required Filled
- Suitability and risk profiling rules in financial regulation
- No regulation of the concept itself
Context of use required Filled
- Attitudes toward risk in decisions.
- absolute risk aversion
- relative risk aversion
- hyperbolic absolute risk aversion
- loss aversion (related behavioural concept)
- ambiguity aversion (related)
Sources Missing, in the backlog
Not described yet. This gap is in the card backlog.
Note: Written from model knowledge without web access; claims are unverified.
Open questions
- Should loss aversion be a separate entry?
- How should survey instruments be linked?
- How should regulatory profiling rules be linked?
Machine files
Provenance
thing registry research (pass 2) · unreviewed
Built from: models/things/publications/thing-q1426675/spec.json