Hi Alex, thanks for the comment, great to pick up issues like this.
I wrote the article, and I agree and am aware of your original point. Your edit is also correct in that we are using risk aversion in the psychological/pure sense, and so the VNM theory does imply that this form of risk aversion is irrational. However, I think you’re right that, given that people are more likely to have heard of the concept of economic risk aversion, the expected value article is likely to be misleading. I have edited to emphasise the way that we’re using risk aversion in these articles, and to clarify that VNM alone does not imply risk neutrality in an economic sense. I’ve also added a bit more discussion of economic risk aversion. Further feedback welcome!
Even though the last paragraph of the expected value maximization article now says that it’s talking about the VNM notion of expected value, the rest of the article still seems to be talking about the naive notion of expected value that is linear with respect to things of value (in the examples given, years of fulfilled life). This makes the last paragraph seem pretty out of place in the article.
Nitpicks on the risk aversion article: “However, it seems like there are fewer reasons for altruists to be risk-neutral in the economic sense” is a confusing way of starting a paragraph about how it probably makes sense for altruists to be close to economically risk-neutral as well. And I’m not sure what “unless some version of pure risk-aversion is true” is supposed to mean.
Thanks, I’ve made some further changes, which I hope will clear things up. Re your first worry, I think that’s a valid point, but it’s also important to cover both concepts. I’ve tried to make the distinction clearer. If that doesn’t address your worry, feel free to drop me a message or suggest changes via the feedback tab, and we can discuss further.
Hi Alex, thanks for the comment, great to pick up issues like this.
I wrote the article, and I agree and am aware of your original point. Your edit is also correct in that we are using risk aversion in the psychological/pure sense, and so the VNM theory does imply that this form of risk aversion is irrational. However, I think you’re right that, given that people are more likely to have heard of the concept of economic risk aversion, the expected value article is likely to be misleading. I have edited to emphasise the way that we’re using risk aversion in these articles, and to clarify that VNM alone does not imply risk neutrality in an economic sense. I’ve also added a bit more discussion of economic risk aversion. Further feedback welcome!
Even though the last paragraph of the expected value maximization article now says that it’s talking about the VNM notion of expected value, the rest of the article still seems to be talking about the naive notion of expected value that is linear with respect to things of value (in the examples given, years of fulfilled life). This makes the last paragraph seem pretty out of place in the article.
Nitpicks on the risk aversion article: “However, it seems like there are fewer reasons for altruists to be risk-neutral in the economic sense” is a confusing way of starting a paragraph about how it probably makes sense for altruists to be close to economically risk-neutral as well. And I’m not sure what “unless some version of pure risk-aversion is true” is supposed to mean.
Thanks, I’ve made some further changes, which I hope will clear things up. Re your first worry, I think that’s a valid point, but it’s also important to cover both concepts. I’ve tried to make the distinction clearer. If that doesn’t address your worry, feel free to drop me a message or suggest changes via the feedback tab, and we can discuss further.