Risk averse is a characteristic of an agent who has a concave utility function (diminishing marginal utility).

Question

Quizplus · Accepted Answer

A concave utility function implies that the agent has diminishing marginal utility, meaning that the additional satisfaction they receive from each additional unit of a good decreases. This makes them less willing to take risks as they place a higher value on preserving their current wealth or well-being.

Risk Averse Is a Characteristic of an Agent Who Has