Risk


 * __Risk__**

The concept of risk is very important to any manager. There is risk associated with everything we do. There is a risk associated with just getting out of bed in the morning and the risk generally increases once we leave home and head out into the world.

However, there is also an opportunity cost associated with everything that we do (as noted by Dr. Rathinasamy in FIN 680) and most people find that they are willing to take the risks associated with leaving home either to go to work or to consume some leisure because the opportunity cost forgone in choosing not to work is high.

There are many tools available to the economist to measure risk. The topics that follow within this Wiki space explain some of these tools including mean (or expected value), variance, and standard deviation. Following the discussions of these topics, there are discussions that outline the three possible categories that each person can belong to in terms of their measure of risk acceptability. These are Risk Aversion, Risk Neutral, and Risk Lover. Finally, the optimal search strategy will be discussed, including an explanation of the meaning of a reservation price.