Is Risk Aversion Irrational?

Synthese:1-13 (forthcoming)
Authors
H. Orri Stefansson
University of Copenhagen
Abstract
A moderately risk averse person may turn down a 50/50 gamble that either results in her winning $200 or losing $100. Such behaviour seems rational if, for instance, the pain of losing $100 is felt more strongly than the joy of winning $200. The aim of this paper is to examine an influential argument that some have interpreted as showing that such moderate risk aversion is irrational. After presenting an axiomatic argument that I take to be the strongest case for the claim that moderate risk aversion is irrational, I show that it essentially depends on an assumption that those who think that risk aversion can be rational should be skeptical of. Hence, I conclude that risk aversion need not be irrational.
Keywords Risk Aversion  Expected Utility  Event-Wise Dominance
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DOI 10.1007/s11229-018-01929-5
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References found in this work BETA

Counterfactual Desirability.Richard Bradley & H. Orri Stefánsson - 2017 - British Journal for the Philosophy of Science 68 (2):485-533.
What is Risk Aversion?H. Orri Stefánsson & Richard Bradley - forthcoming - British Journal for the Philosophy of Science:axx035.
The Foundations of Statistics.Leonard J. Savage - 1954 - Philosophy of Science 23 (2):166-166.
Desirability of Conditionals.H. Orri Stefánsson - 2016 - Synthese 193 (6):1967-1981.

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