Perception of. How we deal with uncertainty, as actors able to form beliefs about the future.
Rabin, Matthew, Richard H Thaler. 2001. Anomalies: Risk Aversion. The
Journal of Economic Perspectives. (DOI:.) (online.) “Using expected utility to
explain anything more than economically negligible risk aversion over
moderate stakes such as $10, $100, and even $1,000 requires a
utility-of-wealth function that predicts absurdly severe risk aversion
over very large stakes. Conventional expected utility theory is simply not
a plausible explanation for many instances of risk aversion that
economists study.”