Search results
Results from the WOW.Com Content Network
risk averse (or risk avoiding) ... The reflection effect is an identified pattern of opposite preferences between negative as opposed to positive prospects: ...
The first item in each quadrant shows an example prospect (e.g. 95% chance to win $10,000 is high probability and a gain). The second item in the quadrant shows the focal emotion that the prospect is likely to evoke. The third item indicates how most people would behave given each of the prospects (either Risk Averse or Risk Seeking).
Risk aversion is a preference for a sure outcome over a gamble with higher or equal expected value. Conversely, rejection of a sure thing in favor of a gamble of lower or equal expected value is known as risk-seeking behavior.
Ellsberg paradox: People exhibit ambiguity aversion (as distinct from risk aversion), in contradiction with expected utility theory. Fenno's paradox: The belief that people generally disapprove of the United States Congress as a whole, but support the Congressman from their own Congressional district.
It is generally taken to be evidence of ambiguity aversion, in which a person tends to prefer choices with quantifiable risks over those with unknown, incalculable risks. Ellsberg's findings indicate that choices with an underlying level of risk are favored in instances where the likelihood of risk is clear, rather than instances in which the ...
Loss aversion, where the perceived disutility of giving up an object is greater than the utility associated with acquiring it. [74] (see also Sunk cost fallacy) Pseudocertainty effect, the tendency to make risk-averse choices if the expected outcome is positive, but make risk-seeking choices to avoid negative outcomes. [75]
In cognitive science and behavioral economics, loss aversion refers to a cognitive bias in which the same situation is perceived as worse if it is framed as a loss, rather than a gain. [1] [2] It should not be confused with risk aversion, which describes the rational behavior of valuing an uncertain outcome at less than its expected value.
This could be attributed to a variety of factors such as an inclination for novelty-seeking, a more optimistic outlook on outcomes, or even a reduced aversion to risk which is inherent in youth. [26] For example, they are more likely to enjoy meat labeled 75% lean meat as opposed to 25% fat, or use condoms advertised as being 95% effective as ...