<p>By reading the explanation and example of Modern Portfolio Theory (Markowitz, 1952) from this <a href="https://analystprep.com/blog/evolution-of-portfolio-theory-efficient-frontier-to-sml/" rel="nofollow noreferrer">link</a>, I saw a picture as below
<a href="https://i.sstatic.net/vlO6X.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/vlO6X.png" alt="enter image description here" /></a></p>
<p>From this website, I also see</p>
<blockquote>
<p>The portion of the minimum-variance curve that <strong>lies above and to the
right of the global minimum variance portfolio is known as the
Markowitz efficient frontier as it contains all portfolios that
rational, risk-averse investors would choose</strong>. (...). As <strong>we move to
higher levels of risk, the resulting increase in return begins to
diminish. The slope begins to flatten</strong>.</p>
</blockquote>
<p>I understand the idea of the document. I understand the rational investors will follow this portfolio construction. However, why the risk-averse also would choose this one. I am wondering which type of investors would not choose the Markowitz efficient frontier ( in the meaning of opposite to risk-averse (e.g. high risk-takers))? <strong>In another word, why risk-takers will not choose this efficient frontier ?</strong></p>

CC BY-SA 4.0
2021-12-09T21:38:33.980Z
Thank @H2ONaCl, I just edited the question, could you please have a look again. Many thanks and warmest regards.
Phil Nguyen
CC BY-SA 4.0
2021-12-10T03:29:30.667Z
The Palgrave Dictionary of Economics has "An agent, perhaps an individual or a firm, is said to be risk averse if the agent prefers a deterministic outcome equal to the expectation of a risky outcome over that risky outcome." One assumption of economics is that people are rational but since gambling exists, economists probably would put their analysis in the category of "behavioral economics".
H2ONaCl
<portfolio-theory>
Curiousity about the choice of risk-takers investors in Modern Porfolio Theory?
Phil Nguyen
# Curiousity about the choice of risk-takers investors in Modern Porfolio Theory?

(Asked by: username_0 on 2021-12-09)

By reading the explanation and example of Modern Portfolio Theory (Markowitz, 1952) from this [link](https://analystprep.com/blog/evolution-of-portfolio-theory-efficient-frontier-to-sml/), I saw a picture as below
[![enter image description here](https://i.sstatic.net/vlO6X.png)](https://i.sstatic.net/vlO6X.png)

From this website, I also see

> The portion of the minimum-variance curve that **lies above and to the
> right of the global minimum variance portfolio is known as the
> Markowitz efficient frontier as it contains all portfolios that
> rational, risk-averse investors would choose**. (...). As **we move to
> higher levels of risk, the resulting increase in return begins to
> diminish. The slope begins to flatten**.

I understand the idea of the document. I understand the rational investors will follow this portfolio construction. However, why the risk-averse also would choose this one. I am wondering which type of investors would not choose the Markowitz efficient frontier ( in the meaning of opposite to risk-averse (e.g. high risk-takers))? **In another word, why risk-takers will not choose this efficient frontier ?**

**Tags:** portfolio-theory

> **Comments:**
> **username_0**: Thank @username_1, I just edited the question, could you please have a look again. Many thanks and warmest regards.  
> **username_1**: The Palgrave Dictionary of Economics has "An agent, perhaps an individual or a firm, is said to be risk averse if the agent prefers a deterministic outcome equal to the expectation of a risky outcome over that risky outcome." One assumption of economics is that people are rational but since gambling exists, economists probably would put their analysis in the category of "behavioral economics".  

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## 0 answers

