Risk aversion is a concept in psychology, economics, and finance, based on the behavior of humans (especially consumers and investors) while exposed to uncertainty to attempt to reduce that uncertainty.
Risk aversion is the reluctance of a person to accept a bargain with an uncertain payoff rather than another bargain with a more certain, but possibly lower, expected payoff. For example, a risk-averse investor might choose to put his or her money into a bank account with a low but guaranteed interest rate, rather than into a stock that may have high expected returns, but also involves a chance of losing value.
Read more about Risk Aversion: Example, Utility of Money, Limitations, Risk Aversion in The Brain, Public Understanding and Risk in Social Activities
Famous quotes containing the words risk and/or aversion:
“Man is so muddled, so dependent on the things immediately before his eyes, that every day even the most submissive believer can be seen to risk the torments of the afterlife for the smallest pleasure.”
—Joseph De Maistre (1753–1821)
“My aversion from music rests on political grounds.”
—Thomas Mann (1875–1955)