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Expected utility hypothesis and Risk aversion

Shortcuts: Differences, Similarities, Jaccard Similarity Coefficient, References.

Difference between Expected utility hypothesis and Risk aversion

Expected utility hypothesis vs. Risk aversion

In economics, game theory, and decision theory the expected utility hypothesis, concerning people's preferences with regard to choices that have uncertain outcomes (gambles), states that if specific axioms are satisfied, the subjective value associated with an individual's gamble is the statistical expectation of that individual's valuations of the outcomes of that gamble. In economics and finance, risk aversion is the behavior of humans (especially consumers and investors), when exposed to uncertainty, in attempting to lower that uncertainty.

Similarities between Expected utility hypothesis and Risk aversion

Expected utility hypothesis and Risk aversion have 20 things in common (in Unionpedia): Affine transformation, Ambiguity aversion, Behavioral economics, Concave function, Cumulative prospect theory, Daniel Kahneman, Economics, Expected utility hypothesis, Expected value, Isoelastic utility, Loss aversion, Marginal utility, Modern portfolio theory, Prospect theory, Risk premium, St. Petersburg paradox, Statistical risk, The American Economic Review, Uncertainty, Variance.

Affine transformation

In geometry, an affine transformation, affine mapBerger, Marcel (1987), p. 38.

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Ambiguity aversion

In decision theory and economics, ambiguity aversion (also known as uncertainty aversion) is a preference for known risks over unknown risks.

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Behavioral economics

Behavioral economics studies the effects of psychological, cognitive, emotional, cultural and social factors on the economic decisions of individuals and institutions and how those decisions vary from those implied by classical theory.

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Concave function

In mathematics, a concave function is the negative of a convex function.

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Cumulative prospect theory

Cumulative prospect theory (CPT) is a model for descriptive decisions under risk and uncertainty which was introduced by Amos Tversky and Daniel Kahneman in 1992 (Tversky, Kahneman, 1992).

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Daniel Kahneman

Daniel Kahneman (דניאל כהנמן; born March 5, 1934) is an Israeli-American psychologist notable for his work on the psychology of judgment and decision-making, as well as behavioral economics, for which he was awarded the 2002 Nobel Memorial Prize in Economic Sciences (shared with Vernon L. Smith).

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Economics

Economics is the social science that studies the production, distribution, and consumption of goods and services.

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Expected utility hypothesis

In economics, game theory, and decision theory the expected utility hypothesis, concerning people's preferences with regard to choices that have uncertain outcomes (gambles), states that if specific axioms are satisfied, the subjective value associated with an individual's gamble is the statistical expectation of that individual's valuations of the outcomes of that gamble.

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Expected value

In probability theory, the expected value of a random variable, intuitively, is the long-run average value of repetitions of the experiment it represents.

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Isoelastic utility

In economics, the isoelastic function for utility, also known as the isoelastic utility function, or power utility function is used to express utility in terms of consumption or some other economic variable that a decision-maker is concerned with.

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Loss aversion

In cognitive psychology and decision theory, loss aversion refers to people's tendency to prefer avoiding losses to acquiring equivalent gains: it is better to not lose $5 than to find $5.

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Marginal utility

In economics, utility is the satisfaction or benefit derived by consuming a product; thus the marginal utility of a good or service is the change in the utility from an increase in the consumption of that good or service.

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Modern portfolio theory

Modern portfolio theory (MPT), or mean-variance analysis, is a mathematical framework for assembling a portfolio of assets such that the expected return is maximized for a given level of risk.

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Prospect theory

Prospect theory is a behavioral economic theory that describes the way people choose between probabilistic alternatives that involve risk, where the probabilities of outcomes are known (.

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Risk premium

For an individual, a risk premium is the minimum amount of money by which the expected return on a risky asset must exceed the known return on a risk-free asset in order to induce an individual to hold the risky asset rather than the risk-free asset.

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St. Petersburg paradox

The St.

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Statistical risk

Statistical risk is a quantification of a situation's risk using statistical methods.

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The American Economic Review

The American Economic Review is a peer-reviewed academic journal of economics.

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Uncertainty

Uncertainty has been called "an unintelligible expression without a straightforward description".

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Variance

In probability theory and statistics, variance is the expectation of the squared deviation of a random variable from its mean.

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The list above answers the following questions

Expected utility hypothesis and Risk aversion Comparison

Expected utility hypothesis has 77 relations, while Risk aversion has 78. As they have in common 20, the Jaccard index is 12.90% = 20 / (77 + 78).

References

This article shows the relationship between Expected utility hypothesis and Risk aversion. To access each article from which the information was extracted, please visit:

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