Entrepreneurs may form their plans on the basis of expected prices equal to most probable prices plus or minus risk allowances. The allowance may be interpreted as a certainty equivalent of subjective probability calculations, and may be given exact formulation under some conditions. The risk allowance will be positive whenever entrepreneurs are willing to sacrifice expected returns for a narrowing of dispersion of possible returns. Diminishing marginal utility of money will explain such conservatism. Limited capital resources also tend to make entrepreneurs behave in a conservative manner.