Editing Risk aversion (section)

== Bargaining and risk aversion ==
Numerous studies have shown that in riskless bargaining scenarios, being risk-averse is disadvantageous. Moreover, opponents will always prefer to play against the most risk-averse person.<ref>{{Cite journal |last1=Roth |first1=Alvin E. |last2=Rothblum |first2=Uriel G. |date=1982 |title=Risk Aversion and Nash's Solution for Bargaining Games with Risky Outcomes |url=https://www.jstor.org/stable/1912605 |journal=Econometrica |volume=50 |issue=3 |pages=639–647 |doi=10.2307/1912605 |jstor=1912605 |issn=0012-9682}}</ref> Based on both the [[Von Neumann–Morgenstern utility theorem|von Neumann-Morgenstern]] and [[Nash equilibrium|Nash Game Theory]] model, a risk-averse person will happily receive a smaller commodity share of the bargain.<ref>{{Cite journal |last1=Murnighan |first1=J. Keith |last2=Roth |first2=Alvin E. |last3=Schoumaker |first3=Francoise |date=1988 |title=Risk Aversion in Bargaining: An Experimental Study |url=https://www.jstor.org/stable/41760532 |journal=Journal of Risk and Uncertainty |volume=1 |issue=1 |pages=101–124 |doi=10.1007/BF00055566 |jstor=41760532 |s2cid=154784555 |issn=0895-5646}}</ref> This is because their utility function concaves hence their utility increases at a decreasing rate while their non-risk averse opponents may increase at a constant or increasing rate.<ref>{{Cite journal |last=Kannai |first=Yakar |date=1977-03-01 |title=Concavifiability and constructions of concave utility functions |url=https://dx.doi.org/10.1016/0304-4068%2877%2990015-5 |journal=Journal of Mathematical Economics |language=en |volume=4 |issue=1 |pages=1–56 |doi=10.1016/0304-4068(77)90015-5 |issn=0304-4068}}</ref> Intuitively, a risk-averse person will hence settle for a smaller share of the bargain as opposed to a risk-neutral or risk-seeking individual. Intuitively, a risk-averse person will hence settle for a smaller share of the bargain as opposed to a risk-neutral or risk-seeking individual. This paradox is exemplified in pedestrian behavior, where risk-averse individuals often choose routes they perceive as safer, even when those choices increase their overall exposure to danger.<ref>Hacohen, S., Shoval, S., & Shvalb, N. (2020). "The paradox of pedestrian's risk aversion". ''Accident Analysis & Prevention'', 142: 105518. [https://www.sciencedirect.com/science/article/pii/S000145751930675X]</ref>