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how and when can i know if the utility is a risk averse one or not?...

how and when can i know if the utility is a risk averse one or not? and if it's related to being concave or not, can i get an explanation of what's concave and how can i find it out from the utility ? a detailed explanation about this subject would be great! thanks
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Answer #1

Utility function of risk averse individual is drawn concave to highlight the assumption of diminishing Marginal utility.( Extra money can lead to increasing utility at first but decreasing Marginal utility) . To explain concave function Consider this simple example : increase in income from 40000 to 50000 will increase person utility more than increase in utility when he is provided with increase in income to 80000, the improvement will not be as great as earlier one.A risk averse individual will refuse a fair bet when he's offered one.

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