Prof. Constantin ANGHELACHE PhD.
Bucharest University of Economic Studies
Prof. Mario G.R. PAGLIACCI PhD.
Universita degli Studi di Perugia
Emilia STANCIU PhD. Student
Cristina SACALĂ PhD. Student
Bucharest University of Economic Studies
Abstract
It is recurrently very likely for decision-makers to wrongly assess risk and consequently to ineffectively put effort in diminishing or avoiding it. Preventing losses or self-protection represent an effort we make in order to reduce the impact of a probable accident. The question is: what would be the level that maximizes the estimated utility of an economic agent? In many cases, the cost-benefit an analysis of prevention is analyzed based on the risk-neutrality assumption. This means that only losses of average size matter. There is no intention of reducing the variability of losses if it doesn’t involve a loss above average. The extreme measure of risk prevention is giving up any type of risk.
Key words: prevention, assets, risk, aversion, optimization
