Risk aversion A risk aversion man: xdF(x) is as better at least as a lottery with F(x) Jenson' s inequality: u( xd F(x)2 u(x)d F(x) u()is concave or strictly concave if the man is(strictly) risk aversion See the figRisk aversion • A risk aversion man: is as better at least as a lottery with F(x) . • Jenson’s inequality: • u(.) is concave or strictly concave if the man is (strictly) risk aversion. See the fig. xdF x( )  u xdF x u x dF x ( ( )) ( ) ( )   