Figure 14-3

question 25

Multiple Choice

Figure 14-3. The figure shows a utility function for Rob.
-Refer to Figure 14-3. If most people's utility functions look like Rob's utility function, then it is easy to explain why

• A)people buy various types of insurance.
• B)we observe a trade-off between risk and return.
• C)most people prefer to hold diversified portfolios of assets to undiversified portfolios of assets.
• D)None of the above are correct.

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Definitions:

Immoral Actions

Behaviors that are considered to be wrong or unethical according to societal norms or personal ethical standards.

Unhappiness

A state of sadness, dissatisfaction, or general discontent.

Political Scientist

A social scientist who studies the theory and practice of politics, governmental policies, and political behavior.

Robert Axelrod

An American political scientist known for his interdisciplinary work on the evolution of cooperation.