What Is Risk Aversion?

British Journal for the Philosophy of Science 70 (1):77-102 (2019)
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Abstract

According to the orthodox treatment of risk preferences in decision theory, they are to be explained in terms of the agent's desires about concrete outcomes. The orthodoxy has been criticised both for conflating two types of attitudes and for committing agents to attitudes that do not seem rationally required. To avoid these problems, it has been suggested that an agent's attitudes to risk should be captured by a risk function that is independent of her utility and probability functions. The main problem with that approach is that it suggests that attitudes to risk are wholly distinct from people's (non-instrumental) desires. To overcome this problem, we develop a framework where an agent's utility function is defined over chance propositions (i.e., propositions describing objective probability distributions) as well as ordinary (non-chance) ones, and argue that one should explain different risk attitudes in terms of different forms of the utility function over such propositions.

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Author Profiles

Richard Bradley
London School of Economics
H. Orri Stefansson
Stockholm University

References found in this work

The Foundations of Statistics.Leonard J. Savage - 1954 - Wiley Publications in Statistics.
Risk and Rationality.Lara Buchak - 2013 - Oxford University Press.
Decision Theory with a Human Face.Richard Bradley - 2017 - Cambridge University Press.
A Subjectivist’s Guide to Objective Chance.David K. Lewis - 1980 - In Richard C. Jeffrey (ed.), Studies in Inductive Logic and Probability, Volume II. Berkeley: University of California Press. pp. 263-293.
The Foundations of Statistics.Leonard J. Savage - 1956 - Philosophy of Science 23 (2):166-166.

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