Quasi-Arithmetic Means and its Applications

Abstract

The motivation was to introduce quasi-arithmetic means and explore their key properties. The study also explores how quasi-arithmetic means contribute to risk assessment and decision-making, especially within the context of investment portfolio management. These means provide a flexible framework for preference aggregation, enabling investors to tailor risk-return trade-offs according to their individual goals. In portfolio optimization, these means serve several critical roles. They enhance risk-adjusted return calculations, support customized utility-based decision-making, refine capital allocation strategies, and improve the aggregation of nonlinear risks.Quasi-arithmetic means offer a powerful and adaptable tool for financial decision-making.