Risk-Averse
Oxford Dictionary of Economics:
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Risk-Averse
An individual is risk-averse if they prefer a certain pay-off of M to a risky prospect with an expected pay-off of M. This will be true whenever the marginal utility of wealth is decreasing, so the utility function is strictly concave. A risk-averse individual will not accept an actuarially fair gamble , and will pay a risk premium to avoid randomness of pay-offs.
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Oxford Dictionary of Economics
A Dictionary of Economics. © 2008
Oxford University Press.
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