Constant Risk Aversion

Zvi Safra*, Uzi Segal

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


Constant risk aversion means that adding a constant to all outcomes of two distributions, or multiplying all their outcomes by the same positive number, will not change the preference relation between them. We prove several representation theorems, where constant risk aversion is combined with other axioms to imply specific functional forms. Among other things, we obtain a form of disappointment aversion theory without using the concept of reference point in the axioms, and a form of the rank dependent model without making references to the ranking of the outcomes. This axiomatization leads to a natural generalization of the Gini index.Journal of Economic LiteratureClassification Number: D81

Original languageEnglish
Pages (from-to)19-42
Number of pages24
JournalJournal of Economic Theory
Issue number1
StatePublished - Nov 1998


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