I'm reading the topic concavity in risk aversion utility function of consumption function. I'm having trouble understanding why the consumption function is assumed to be concave. I tried looking but most explained it in a way that is linked to the utility function. I need to know why on itself, the consumption function is concave. thank you so much to anyone willing to help.

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  • $\begingroup$ What are the axes? Assuming consumption is on the vertical, then what is the horizontal axis? $\endgroup$
    – Daniel
  • $\begingroup$ the horizontal axis is wealth $\endgroup$
    – eve
  • $\begingroup$ You should clarify what exactly you mean here. The "consumption function" is a concept from macroeconomics, but it has disposable income, not wealth, on the horizontal axis. "Risk aversion" and "utility function" are concepts from microeconomics. Perhaps you are mixing up things here? $\endgroup$
    – VARulle


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