Hyperbolic absolute risk aversion

Hyperbolic absolute risk aversion (HARA) is a concept in economics and finance that describes a particular class of utility functions and how they capture an individual's risk preferences. In general, risk aversion refers to the tendency of individuals to prefer certainty over uncertainty, particularly in the context of financial decisions. The concept of absolute risk aversion is formalized through the Arrow-Pratt measure, which quantifies an individual's risk aversion based on their utility function.