Question

Can an individual be risk averse but not loss averse and how?

Answer 1

Risk aversion: means its a safety or precautions that taken by an individual from uncertainty and potential for loss or pain.when an investor have a choice of two investment, the investor will choose the one with lower risk.

Loss aversion: loss aversion is very much realated to risk aversion, means here the investor will express both risk aversion and risk seeking behaviour.

Now how an individual be risk averse and not to be loss averse?

Here an inidvidual should select the investment with lower risk and gains or losses should be treated as longterm period and not in short period. Most investors are measure thier investment performance in short period, so this should be changed and only deal with guaranteed investment.