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Risk Aversion in the Small and in the Large

John W. Pratt
Econometrica
Vol. 32, No. 1/2 (Jan. - Apr., 1964), pp. 122-136
Published by: The Econometric Society
DOI: 10.2307/1913738
Stable URL: http://www.jstor.org/stable/1913738
Page Count: 15
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Risk Aversion in the Small and in the Large
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Abstract

This paper concerns utility functions for money. A measure of risk aversion in the small, the risk premium or insurance premium for an arbitrary risk, and a natural concept of decreasing risk aversion are discussed and related to one another. Risks are also considered as a proportion of total assets.

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