In economics and finance, risk neutral behavior is between risk aversion and risk seeking. If offered either €50 or a 50% chance of each of €100 and nothing, a risk neutral person would have no preference between the two options. In contrast, a risk averse person presented with these options would accept some amount less than €50 in preference to the risky option, while a risk seeking person would accept a less than 50% chance of €100 in preference to the sure €50.
Read more about Risk Neutral: Theory of The Firm, Portfolio Theory, The Risk Neutral Utility Function
Famous quotes containing the words risk and/or neutral:
“Men’s hearts are cold. They are indifferent. Not all the coal that is dug warms the world. It remains indifferent to the lives of those who risk their life and health down in the blackness of the earth; who crawl through dark, choking crevices with only a bit of lamp on their caps to light their silent way; whose backs are bent with toil, whose very bones ache, whose happiness is sleep, and whose peace is death.”
—Mother Jones (1830–1930)
“The lonely Earth amid the balls
That hurry through the eternal halls,
A makeweight flying to the void,
Supplemental asteroid,
Or compensatory spark,
Shoots across the neutral Dark.”
—Ralph Waldo Emerson (1803–1882)