Why must risk averse be correlated with a concave utility function?

Jairo Hodges

Jairo Hodges

Answered question

2022-11-18

Why must risk averse be correlated with a concave utility function?

Answer & Explanation

yen1291kp6

yen1291kp6

Beginner2022-11-19Added 12 answers

The main formula of a line is;
y=ax+b
We should use one point to find the real equation. If we use (-1,-3) point;
y = a x + b - 3 = - a + b
a is the slope of the equation, we found that as 5;
- 3 = ( 5 - 1 ) + b - 3 = - 5 + b b = 2
So the equation of the line will be;
y = a x + b y = 5 x + 2 ̲

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