Year of selection 2010
Consider an uncertain situation, and then imagine a risky decision. Would you take the same level of risk if you were deciding for someone else? It would probably be lower if the person for whom you are deciding is your child. However, when deciding for yourself, your risk manager might seek higher risk in order to achieve higher gains.
In the financial field, delegated decisions are the norm. Dr Maafi is trying to answer this tricky question: do people engage in higher, lower or the same degree of risk aversion when deciding for others?
A better understanding of the unreasonable risk-seeking behavior observed among economic agents (i.e., investors, traders, insurers, etc.) might help devise a payoff mechanism that preserves the best interests of people involved in the decisions of others.
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