asset-averse theory

Asset-averse theory suggests that investors prefer to avoid risking their existing assets, even if taking some risk could lead to higher gains. Essentially, having something already valuable makes people reluctant to jeopardize it, prioritizing the preservation of what they have over pursuing potentially larger but uncertain returns. This mindset influences investment decisions, leading to more conservative strategies aimed at protecting current wealth rather than maximizing growth. It highlights the human tendency to act cautiously when it comes to safeguarding already accumulated assets.