Ambiguity Aversion Vs. Risk Aversion
The distinction between ambiguity aversion and risk aversion is important but subtle. Risk aversion comes from a situation where a probability can be assigned to each possible outcome of a situation. Ambiguity aversion applies to a situation when the probabilities of outcomes are unknown (Epstein 1999). The main idea behind ambiguity aversion encompasses the idea of risk aversion. A real world consequence of increased ambiguity aversion is the increased demand for insurance because the general public are averse to the unknown events that will affect their lives and property (Alary, Treich, and Gollier 2010).
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Famous quotes containing the words ambiguity, aversion and/or risk:
“Indeed, it is that ambiguity and ambivalence which often is so puzzling in women—the quality of shifting from child to woman, the seeming helplessness one moment and the utter self-reliance the next that baffle us, that seem most difficult to understand. These are the qualities that make her a mystery, the qualities that provoked Freud to complain, “What does a woman want?””
—Lillian Breslow Rubin (20th century)
“My true friends have always given me that supreme proof of devotion, a spontaneous aversion for the man I loved.”
—Colette [Sidonie Gabrielle Colette] (1873–1954)
“The risk for a woman who considers her helpless children her “job” is that the children’s growth toward self-sufficiency may be experienced as a refutation of the mother’s indispensability, and she may unconsciously sabotage their growth as a result.”
—Letty Cottin Pogrebin (20th century)