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What is risk aversion?

Bradley, Richard and Stefansson, H. Orii (2017) What is risk aversion? British Journal for the Philosophy of Science. ISSN 0007-0882 (In Press)

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Abstract

According to the orthodox treatment of risk attitudes in decision theory, such attitudes are explained in terms of the agent's desires about concrete outcomes. The orthodoxy has been criticised both for conflating two types of attitudes and for committing agents to attitudes that do not seem rationally required. To avoid these problems, it has been suggested that we model risk attitudes in terms of a risk function that is independent of the agent's utility and probability functions. The main problem with that approach is that it suggests that attitudes to risk are wholly distinct from people's (non-instrumental) desires. To overcome this problem, we develop a framework where an agent's utility function is partly defined over chance propositions (i.e., propositions describing objective probability distributions), and argue that one should represent different risk attitudes in terms of different forms of the utility function over such propositions.

Item Type: Article
Official URL: https://academic.oup.com/bjps
Additional Information: © 2017 The Authors
Subjects: B Philosophy. Psychology. Religion > B Philosophy (General)
H Social Sciences > HC Economic History and Conditions
Sets: Departments > Philosophy, Logic and Scientific Method
Date Deposited: 15 Jun 2017 11:52
Last Modified: 15 Jun 2017 11:52
URI: http://eprints.lse.ac.uk/id/eprint/81364

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