Risk attitude and metric Bernoulli-decision-rule

Abstract

The paper is based on the metric Bernoulli-decision-rule developed by Reichel [5]. Under certain conditions, this principle defines preference orderings of "probability games" and support decisions in evaluating economic processes.The statements examine the connection between "risk parameters" (al, a2)resulting from the basis model and risk attitudes well known from literature. The results permit -at least -a qualitative description of risk preferences using the risk parameters (a 1, a2) and eludicate the practicability of metric Bernouilli-decision-rule mentioned in other papers like Michel The utility theory developed by Reichel is characterized by two points. He distinguishes the utility of certain income from the utility of a random event (described by means of the notion "probability game"). In the following we are concerned only with the utility of such a probability game. Moreover Reichel combines the Bernoulli principle with a metric principle in such a manner, that the quantities expected value, variance, and skewness of a probability game suffice to calculate its utility. The