Asked by
Ankit kumar
on Oct 14, 2024
Verified
In an experiment on risk aversion and inconsistency, a group of people were given the option to accept or reject the following gamble: 50% chance to win $150, 50% chance to lose $100.Which of the following scenarios is most accurate and would most likely occur?
A) A majority accepted the gamble.People who chose the gamble can expect to gain from it.
B) A majority rejected the gamble.People who chose the gamble can expect to gain from it.
C) A majority accepted the gamble.People who chose the gamble can expect to lose from it.
D) A majority rejected the gamble.People who chose the gamble can expect to lose from it.
E) People were evenly split between accepting and rejecting the gamble.Expected winnings from the gamble are zero.
Risk Aversion
A preference for certainty over uncertainty, where an individual prefers outcomes with lower risk and potentially lower returns.
Expected Winnings
The average amount one can expect to win or lose from a gamble or game, calculated by multiplying each possible outcome by its probability and summing the results.
- Comprehend the critical nature of risk assessment and the process of decision-making when faced with uncertainty.
Verified Answer
YC
Learning Objectives
- Comprehend the critical nature of risk assessment and the process of decision-making when faced with uncertainty.