Which of the Following Describes the Certainty Effect

question 1

Multiple Choice

Which of the following describes the certainty effect?

• A)People are more willing to pay to reduce their risk from 10% down to zero than they are to reduce their risk from 50% down to 40%.
• B)People are more willing to pay for a warranty plan that completely covers 30% of the possible problems rather than a plan that covers all problems with 30% probability.
• C)People are more willing to take a vaccine that has 100% protection for one strain of a disease and 0% protection for another strain of the disease, than a vaccine that offers 50% protection for both strains of the disease.
• D)All of the above.

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Definitions:

Mean

The average of a set of numbers, calculated by adding all the numbers together and dividing by the count of numbers.

Annual Revenue

The total income generated by a company or organization in one fiscal year before any deductions are made.

Standard Deviation

A metric that reflects the degree of spread or scattering of values within a collection, illustrating the deviation of values from the central mean.

Probability

An assessment of the probability that a specific event will happen.