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:
“I’m a very smart guy. I haven’t a feeling or a scruple in the world. All I have the itch for is money. I am so money greedy that for twenty-five bucks a day and expenses, mostly gasoline and whisky, I do my thinking myself, what there is of it; I risk my whole future, the hatred of the cops ... I dodge bullets and eat saps, and say thank you very much, if you have any more trouble, I hope you’ll think of me, I’ll just leave one of my cards in case anything comes up.”
—Raymond Chandler (1888–1959)
“The United States must be neutral in fact as well as in name.... We must be impartial in thought as well as in action ... a nation that neither sits in judgment upon others nor is disturbed in her own counsels and which keeps herself fit and free to do what is honest and disinterested and truly serviceable for the peace of the world.”
—Woodrow Wilson (1856–1924)