The Law of Large Numbers

question 84

Multiple Choice

The law of large numbers:

• A) can be used to explain why some people are risk averse and others are risk neutral or risk loving.
• B) can be used to explain why some people choose to self-insure against random, single and largely unpredictable events.
• C) states that large amounts of information are often preferred to small amounts of information.
• D) states that the average outcome of a large number of similar events can often be predicted.

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Definitions:

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