Heckman Curve

The Heckman Curve illustrates the relationship between risk and reward, particularly in investments or economic decision-making. It shows that as the level of risk increases, the potential for higher returns also rises, but so does the chance of experiencing losses. At low levels of risk, returns are modest, but as risk grows, there's a sweet spot where returns can significantly improve before eventually tapering off or diminishing. Essentially, it highlights the balance between pursuing higher rewards and managing risks effectively in both personal finance and broader economic contexts.