Risk aversion

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Risk aversion is the tendency to prefer a sure gain of a moderate amount over a riskier outcome, even if the riskier outcome might have a higher expected payoff.


Definitions

According to Organizational Behavior by Robbins and Judge (17th edition),

Risk aversion. The tendency to prefer a sure gain of a moderate amount over a riskier outcome, even if the riskier outcome might have a higher expected payoff.

According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),

Risk aversion. Risk-averse investors dislike risk and require higher rates of return as an inducement to buy riskier securities.

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