Economics Risk And Return Questions Medium
The certainty equivalent is a concept in economics that refers to the guaranteed amount of money or return that an individual would be willing to accept instead of taking a risky investment or uncertain outcome. It represents the monetary value at which an individual is indifferent between receiving a certain amount of money and taking a gamble with a potentially higher or lower return. The certainty equivalent is used to measure an individual's risk aversion and is an important factor in decision-making under uncertainty.