Jon Is Risk Averse

question 206

Multiple Choice

Jon is risk averse. When he buys insurance against all risks, then

• A) he knows his wealth with certainty.
• B) his utility exceeds his expected utility.
• C) his wealth exceeds his expected wealth.
• D) all of the above.

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Definitions:

Flashbacks

Sudden, intense recollections of past events or experiences, often associated with trauma.

Problem Gambling

Compulsive gambling behavior that disrupts personal, family, or vocational pursuits.

VLTs

Video Lottery Terminals, a form of electronic gambling machine found in casinos and bars.

Exogenous Opiates

Narcotics, which bind to receptor sites throughout the body, including the brain, spinal cord, and bloodstream, and reduce the body’s production of endogenous opiates.