645375
Beschreibung
Mindmap von pntalarico, aktualisiert more than 1 year ago
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Erstellt von pntalarico
vor mehr als 10 Jahre
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Psychology of Risk
- The manager of a business has
a 'responsibility' to plan, organise
and control the business - to
direct business activities to
achieve the goals of the business
- Managers have a
responsibility to the
'stakeholders' in the
business
- Managers have a
responsibility to the
'stakeholders' in the
business
- Utility Theory
- Utility theory provides
an explanation for the
fact that people make
different choices under
risk
- It is possible, though not always
practical, to derive a decision maker's
utility function and to apply that
function to choices concerning risk
- As the decision maker is the person making
the choice under risk, his or her utility will
ultimately measure the expected gain or loss
from the risky choice
- Utility theory provides
an explanation for the
fact that people make
different choices under
risk
- Methods used
to obtain a
person's utility
function
- Single attribute
(uni-dimensional utilities),
for example MONEY!
- Multi-attribute
utilities -
including
things other
than money
- Single attribute
(uni-dimensional utilities),
for example MONEY!
- Certainty Equivalent (CE)
- The amount
exchanged with
certainty that makes the
decision-maker
indifferent between this
exchange and some
particular risky prospect
- The amount
exchanged with
certainty that makes the
decision-maker
indifferent between this
exchange and some
particular risky prospect
- Risk Premium
- This concept is closely
related to the Expected
Monetary Value (EMV)
and the Certainty
Equivalent (CE). It is
defined as the
difference between the
expected monetary
value and the certainty
equivalent
- Risk Premium =
Expected
Monetary Value
- Certainty
Equivalent
- Risk Premium =
Expected
Monetary Value
- Certainty
Equivalent
- Risk Aversion
- Does not imply that the decision-maker is
unwilling to take risks. However the
decision-maker must be compensated for taking
risk, and that the amount of compensation
required increases as the risks increase
- Does not imply that the decision-maker is
unwilling to take risks. However the
decision-maker must be compensated for taking
risk, and that the amount of compensation
required increases as the risks increase
- Risk
Neutral
- Such a decision-makes
gives little attention to the
risk weighting, and is
assumed to maximise EMV
as the choice criteria
- Such a decision-makes
gives little attention to the
risk weighting, and is
assumed to maximise EMV
as the choice criteria
- Risk Preferring
- Risk preferrer would be
willing to risk a loss in the
anticipation of gaining a
higher outcome
- Risk preferrer would be
willing to risk a loss in the
anticipation of gaining a
higher outcome
- This concept is closely
related to the Expected
Monetary Value (EMV)
and the Certainty
Equivalent (CE). It is
defined as the
difference between the
expected monetary
value and the certainty
equivalent
- Rational Management of Risk
- Maximisation of
expected values
- Avoidance of
catasrophe
- Ignoring
remote
possibilities
- Maximisation of
expected values
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