Attitudes to risk play a central role in economics. Policy makers should know them in order to judge the certainty equivalent of the effects of policy on individuals. What might look like a policy improvement when judged by the average impact could easily entail a welfare loss for risk averse individuals if the variance of expected impacts is wide compared to the alternatives.
Cox, J.C. and Harrison, G.W. (2008), "Risk aversion in experiments: An introduction", Cox, J.C. and Harrison, G.W. (Ed.) Risk Aversion in Experiments (Research in Experimental Economics, Vol. 12), Emerald Group Publishing Limited, Bingley, pp. 1-7. https://doi.org/10.1016/S0193-2306(08)00001-XDownload as .RIS
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