As long as you have a utility function u(), on an outcome x (preferebly monotonous), but non-linear you get some kind of “risk aversion”.
But a clear narrative on the u() non linearity is necessary for any risk aversion argument.
For example, I have some intuition that the same total human population spread over time is better than concentrated on a given period. Something like “time is interesting, better be represented across it”.
This generates a kind of “risk aversion”. The opposite intuition (the more human lives are overlapped, the more interesting), would lead to other.
There are many risk aversions, and they are very different; “risk aversion” is exactly as “non linearity”. How much useful can be said about “non-linearity”?
I agree with your point that risk aversion is “just” pointing out a non-linearity, but there is an incredible amount you can say about non-linearity. And you can say the same thing about how any concept, when reduced to “just X” seems trivial, but they are still often useful.
Could be useful, but I would say that the more explicit is the u() and the x, the easier is to assess the validity of the argument. Thank you for the nice (and clarifiying) discussion!
As long as you have a utility function u(), on an outcome x (preferebly monotonous), but non-linear you get some kind of “risk aversion”.
But a clear narrative on the u() non linearity is necessary for any risk aversion argument.
For example, I have some intuition that the same total human population spread over time is better than concentrated on a given period. Something like “time is interesting, better be represented across it”.
This generates a kind of “risk aversion”. The opposite intuition (the more human lives are overlapped, the more interesting), would lead to other.
There are many risk aversions, and they are very different; “risk aversion” is exactly as “non linearity”. How much useful can be said about “non-linearity”?
I agree with your point that risk aversion is “just” pointing out a non-linearity, but there is an incredible amount you can say about non-linearity. And you can say the same thing about how any concept, when reduced to “just X” seems trivial, but they are still often useful.
Could be useful, but I would say that the more explicit is the u() and the x, the easier is to assess the validity of the argument. Thank you for the nice (and clarifiying) discussion!