Risk Aversion Derivation

[Kingunnno]

Hello Everyone,

This is a relatively quick query for someone familiar with the topic. More specifically, I don't understand how the following equation:

Becomes the following one after A(c) is differentiated (leaving out the inequality with respect to zero as that is just an indication of DARA (Decreasing Absolute Risk Aversion)):

I would be extremely grateful if someone could explain this passage step-by-step.

Thank you in advance.

 

[Cubist]

We don't provide step-by-step solutions, but we will try to help you solve this for yourself (please see READ BEFORE POSTING).

In the expression...

[math] -\frac{u''(c)}{u'(c)}[/math]
...don't concentrate too much on the symbols u''(c) and u'(c), but notice that there's a division. Did you learn a rule for differentiating something divided by something else?

 

[Kingunnno]

We don't provide step-by-step solutions, but we will try to help you solve this for yourself (please see READ BEFORE POSTING).

In the expression...

[math] -\frac{u''(c)}{u'(c)}[/math]
...don't concentrate too much on the symbols u''(c) and u'(c), but notice that there's a division. Did you learn a rule for differentiating something divided by something else?

Thank you,

I somehow did not think about the quotient rule .