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Risk as a primitive: A survey of measures of perceived risk

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Abstract

The concept of risk is essential to many problems in economics and business. Usually, risk is treated in the traditional expected utility framework where it is defined only indirectly through the shape of the utility function. The purpose of utility functions, however, is to model preferences. In this paper, we review those approaches which directly model risk judgements. After a short review of naive risk measures used in earlier economic literature, we present recent theoretical and empirical developments.

Zusammenfassung

Risiko ist ein Konzept, das bei der Behandlung vieler volks-oder betriebswirtschaftlicher Probleme eine wesentliche Rolle spielt. Üblicherweise wird Risiko im Rahmen des traditionellen Erwartungsnutzenmodells behandelt, bei dem es nur indirekt über die Form der Nutzenfunktion erfaßt wird. Der Zweck von Nutzenfunktionen besteht aber darin, Präferenzen zu modellieren. In diesem Aufsatz wird ein Überblick über solche Ansätze gegeben, die Risikowahrnehmungen direkt modellieren. Nach einer kurzen Darstellung naiver Risikomaße, die aus der früheren ökonomischen Literatur bekannt sind, werden neuere theoretische und empirische Konzepte präsentiert.

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Authors and Affiliations

  1. Seminar für Statistik/Séminaire de Statistique, University of Fribourg, Avenue de Beauregard 13, CH-1700, Fribourg, Switzerland

    H. W. Brachinger

  2. Lehrstuhl für Allgemeine BWL, Finanzwirtschaft, insbesondere Bankbetriebslehre, University of Mannheim, D-68131, Mannheim, Germany

    M. Weber

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  1. H. W. Brachinger
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  2. M. Weber
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Brachinger, H.W., Weber, M. Risk as a primitive: A survey of measures of perceived risk. OR Spektrum 19, 235–250 (1997). https://doi.org/10.1007/BF01539781

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  • DOI: https://doi.org/10.1007/BF01539781

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