Time ago, I took part in an exchange on risk aversion that can be useful.
“I remind you that “risk aversion” is a big deal in economics/finance because of the decreasing marginal utility of income. In fact, in economics and finance, risk aversion for rational agents is not a primitive parameter, but a consequence of the CRRA parameter of your consumption function. So I think risk aversion turns quite meaningless for non monetary types of loss.”
The concept is slippery: you really need to clarify “why utility is non convex” in the relevant variable? Risk aversion in economics is not primitive: it is derived from decreasing marginal utility of consumption...
Time ago, I took part in an exchange on risk aversion that can be useful.
“I remind you that “risk aversion” is a big deal in economics/finance because of the decreasing marginal utility of income. In fact, in economics and finance, risk aversion for rational agents is not a primitive parameter, but a consequence of the CRRA parameter of your consumption function. So I think risk aversion turns quite meaningless for non monetary types of loss.”
See here the complete exchange:
https://forum.effectivealtruism.org/posts/mJwZ3pTgwyTon2xmw/?commentId=grW3y8JCmNK2rjFPA
The concept is slippery: you really need to clarify “why utility is non convex” in the relevant variable? Risk aversion in economics is not primitive: it is derived from decreasing marginal utility of consumption...