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:
“Nature, we are starting to realize, is every bit as important as nurture. Genetic influences, brain chemistry, and neurological development contribute strongly to who we are as children and what we become as adults. For example, tendencies to excessive worrying or timidity, leadership qualities, risk taking, obedience to authority, all appear to have a constitutional aspect.”
—Stanley Turecki (20th century)
“Quintilian [educational writer in Rome around A.D. 100] thought that the earliest years of the child’s life were crucial. Education should start earlier than age seven, within the family. It should not be so hard as to give the child an aversion to learning. Rather, these early lessons would take the form of play—that embryonic notion of kindergarten.”
—C. John Sommerville (20th century)