Measuring risk-aversion: The challenge

Thomas, Philip

doi:10.1016/j.measurement.2015.07.056

Cited by 45 publications

(30 citation statements)

References 13 publications

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“…These outcomes can be about money or happiness or anything else that is important to him/her. 14 Risk-aversion 15 , ε , (given a hyphen here to signify its status here as a mathematically defined parameter; see Appendix B) is fundamental in determining how much satisfaction or utility we obtain from a good or money.…”

Section: Methodsmentioning

confidence: 99%

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The four regions in settlement space: a game-theoretical approach to investment treaty arbitration. Part I: modelling

Broom

Collinsy

et al. 2017

Law, Probability and Risk

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This article uses game theory to investigate investor-state dispute settlement and related dispute resolution strategies through international arbitration. When deciding whether either to bring or to defend a claim rather than pursue settlement, investors and states will select strategies to maximize their respective payoffs, either by securing compensation or successfully defeating a claim for compensation. This article develops a model decision making strategy for claimant investors and defendant states based on the observed patterns of outcomes in actual investment treaty arbitration awards. Embedding the problem in the context of utility and hence risk-aversion, it will offer a general solution for the arbitration "game". Four regions will be identified in the settlement space consisting of the respondent offer against claimant success probability. It will be shown that no settlement is possible in three of these four regions. The go-no-go probability of claimant victory below which it would not be reasonable for a potential claimant to proceed will be quantified. An algorithm is developed for calculating the settlement sum that the respondent may offer with a reasonable expectation of acceptance by the claimant. 1 This article will not engage with behavioural economics literature stressing irrational features of decisionmaking, such as those incorporating biases and heuristics: see further e.g. T Ulen, 'The Importance of Behavioral Law' in E Zamir and D Teichman eds. Oxford Handbook of Behavioral Economics and the Law (Oxford University Press, 2014)

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Section: Methodsmentioning

confidence: 99%

“…We may compare the limiting values, max v and min v , using the equations associated with the conservation of money. Combining equations (14), (15) and 16:…”

Section: Vertex Ymentioning

confidence: 99%

The four regions in settlement space: a game-theoretical approach to investment treaty arbitration. Part I: modelling

Broom

Collinsy

et al. 2017

Law, Probability and Risk

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“…The fatality rate provides a measure of expected fatalities per unit of energy produced, whereas the maximum credible consequences of a single accident can be seen as a measure of risk aversion. The latter plays an important role in risk management for different stakeholders., According to Thomas it is "a measure of the feeling guiding the person who faces a decision with uncertain outcomes" [9].…”

Section: Introductionmentioning

confidence: 99%

A comparison of risk measures for accidents in the energy sector and their implications on decision-making strategies

Spada

Paraschiv

Burgherr

2018

Energy

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Within the broader context of energy security and critical infrastructure protection, the comprehensive assessment of accidents and their related consequences are of high priority for many stakeholders. The risk of accidents is commonly assessed by risk indicators, since they can provide a direct comparison between energy chains and country groups. In this study, Value-at-Risk (VaR), Expected Shortfall (ES) and the Spectral Risk Measures (SRM) are applied within an energy security perspective. In particular, fatality risk indicators are calculated for different characteristics of fossil data sets extracted from the Energy-related Severe Accident Database (ENSAD). The aim is to understand the applicability of such risk measures in a different context and field of application than the financial realm for which they were originally developed. The use of these risk measures could help to facilitate a better understanding of energy accident risks to insurers and other industry stakeholders that normally focus on financial and less infrastructure-related aspects. Furthermore, the pros and cons of these risk measures, and their implications for decision-making strategies are discussed. The results clearly demonstrate the usefulness of VaR, ES and SRM compared to the often used maximum consequence indicator in the evaluation of accident risks in the energy sector.

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“…Including risk aversion in the risk-balancing analysis is not easy due to measurement challenges (Thomas, 2016). Gabriel and Baker (1980) assumed that the ultimate goals of farmers are profit maximization and firm survival and that they will try to maximize net returns 25 Risk aversion is commonly defined in the literature as the risk attitude (perception and preference) and the fundamental descriptor of the feeling guiding the person taking a decision between two alternatives when the outcome of one or both is uncertain (Thomas, 2016).…”

Section: Risk-balancingmentioning

confidence: 99%

“…One of the challenges in agricultural economics and finance literature is the lack of a commonly accepted measure of farm risks (Hardaker et al, 2015;Thomas, 2016). In addition, estimating the panel fixed-effects regression model is econometrically challenging.…”

Section: Robustness Checksmentioning

confidence: 99%

Essays on the dynamics and heterogeneity of capital structure, risk and profit, with special reference to farm businesses

Tamirat¹

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People interested in the research are advised to contact the author for the final version of the publication, or visit the DOI to the publisher's website. • The final author version and the galley proof are versions of the publication after peer review. • The final published version features the final layout of the paper including the volume, issue and page numbers. Link to publication General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal. 'Can an Ethiopian change his skin, or a leopard its spots? Neither can you do good who are accustomed to doing evil' Jeremiah 13:23 I believe luck is a plot where opportunity meets preparation. In that sense, I'm the luckiest person on earth. If this is to be called a success in any form, and I look taller than yesterday, it is only because I stand on the shoulder of so many great friends, families, and colleagues. I'm so happy that I got to write this part for I have so many people to thank who have helped me all the way through and wouldn't be here, otherwise. First and foremost, praises and thanks to the mother of Jesus Christ, Virgin Mary, for giving me the strength and the showers of blessings throughout my life. My exceptional tribute goes to my Ph.D. supervisors, Professor Joost M.E. Pennings and Andres-Trujillo Barrera. Joost has been supportive and given me the freedom to pursue various projects. He is as passionate and enthusiastic about research and publication as I met him for the first time at Wageningen University in 2011. I hope that I could be as lively, energetic and passionate as you, and to someday be able to command an audience as well as you can. The progress report I must submit every Friday kept me in track [there were times I want to cry so much when I write those reports]. Your 'hello Addy my friend' whenever you pass by my office serves both as a greeting and a reminder of something I have to finish and email it to you; your discontentment with me for not being able to shoot [aim] high and desire to settle for less, reminds me of my father and always motivates me; and your 'does this ring a bell to you, Addy?' reminds me how much more I have to read. I am grateful for the opportunity you gave me. Andres has been a true support, very easy to talk to and gives much attention to the details. Every time I forget to address the comments he made, he has always a very diplomatic way of reminding me not to forget it again [this could happen a dozen times in one project]. I am grateful for your support, sharing yo...

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Measuring risk-aversion: The challenge

Cited by 45 publications

References 13 publications

The four regions in settlement space: a game-theoretical approach to investment treaty arbitration. Part I: modelling

The four regions in settlement space: a game-theoretical approach to investment treaty arbitration. Part I: modelling

A comparison of risk measures for accidents in the energy sector and their implications on decision-making strategies

Essays on the dynamics and heterogeneity of capital structure, risk and profit, with special reference to farm businesses

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