Biochemistry, Genetics and Molecular Biology
3 years ago

Evolutionary study reveals why some take risks while others play it safe

Journal of Economic Theory
Evolutionary foundation for heterogeneity in risk aversion
Yuval Heller, Ilan Nehama

Paper Summary

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The article explores why people are cautious about taking risks. It suggests that a mix of risk-averse and risk-taking individuals in a group is best for long-term growth. The study finds that having a variety of risk attitudes in a population can lead to optimal decision-making. It also shows that a simple distribution where everyone has a consistent level of risk aversion can lead to good outcomes.