Prudence is good judgment in the pursuit of one's interests. A prudent person characteristically acts in a rationally self-interested way, with long-term considerations in mind. An imprudent person might pursue short-term pleasures and later deal with bad consequences that outweigh the pleasures. Prudence is therefore not just a matter of desire satisfaction; in fact, prudence often involves deferring gratification in aid of maximizing it. Prudence is a virtue in a manager or a professional person, particularly one who is another person's agent. Imprudence in one's own case is foolish; imprudence on another's behalf is morally irresponsible.

A prudent investor takes rational risks. One's risk curve depends on how one evaluates certain possible states, particularly gains or losses. Your risk curve may differ from mine without either ...