Consider the Following Scenario When Answering the Following Questions

question 118

Multiple Choice

Consider the following scenario when answering the following questions:
Suppose that,in an experimental setting,100 students are presented with two situations involving risk and return.The students are first asked to choose between Gamble A and Gamble B,where:
Gamble A: The student will receive $1 million with a 100 percent probability.
Gamble B: The student will receive $1 million with an 89 percent probability,$5 million with a 10 percent probability,and $0 million (nothing) with a 1 percent probability.
The students are then asked to choose between Gamble C and Gamble D,where:
Gamble C: The student will receive $5 million with a 10 percent probability.
Gamble D: The student will receive $1 million with an 11 percent probability.
-If Student 1 chose Gambles A and C,Student 2 chose Gambles A and D,and Student 3 chose Gambles B and C,which choices exhibited preference reversal?

• A) All students exhibited preference reversal.
• B) Students 1 and 2 exhibited preference reversal,but Student 3 did not.
• C) Students 1 and 3 exhibited preference reversal,but Student 2 did not.
• D) Student 1 exhibited preference reversal,but Students 2 and 3 did not.
• E) None of the students exhibited preference reversal.

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Definitions:

Ethics Competency

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Insider Trading

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Alcohol Addiction

A chronic disease characterized by uncontrolled drinking and preoccupation with alcohol, despite negative consequences.

Effectiveness of Punishment

the degree to which punitive measures achieve the desired outcome of deterring undesirable behaviors or enforcing compliance.