Estimate Your Risk Preference
Let's consider how you might handle an opportunity to grow a crop, under a situation in which crops fail about half the time. How much would you be willing to spend to produce the crop if you have a 50% chance of making the minimum and a 50% chance of making the maximum?
Enter the minimum payoff you think the crop should yield:
Enter the maximum payoff you think the crop should yield:
Click the right arrow below to proceed to Round 1 of the exercise.
Estimate Your Risk Preference (Round 1)  
 
 
 
 
     
Click the right arrow below to proceed to Round 2 of the exercise.  
Estimate Your Risk Preference (Round 2)  
 
 
 
 
     
Click the right arrow below to proceed to Round 3 of the exercise.  
Estimate Your Risk Preference (Round 3)  
 
 
 
 
     
Click the right arrow below to proceed to Round 4 of the exercise.  
     
Estimate Your Risk Preference (Round 4)  
 
 
 
 
     
Click the right arrow below to proceed to a graph of your results.  
 
 
     
  Your Relative RAC
  Your Risk Tolerance
 
  Risk Preference Key  
  Negative = Risk Taker  
  0 = Risk neutral  
  1 = Somewhat risk averse  
  2 = Rather risk averse  
  3 = Very risk averse  
  4 = Almost paranoid about risk  
Industry Risk Preference
Howard (1988) studied risk preferences.  He found that he could approximate risk tolerance for a "typical" business from their sales, income or equity.  Enter your net income,  net sales and net equity below.
Net Sales ($/1000)            
Net Income ($/1000)            
Net Equity ($/1000)            
Industry Risk Preference
  Net Sales ($/1000) Net Income ($/1000) Net Equity ($/1000) Average ($/1000)      
         
Industry Risk Tolerance