Which of the Following Statements Is Correct for a Decision

question 66

Multiple Choice

Which of the following statements is correct for a decision maker facing a choice between a sure thing and a lottery when the sure thing has the expected payoff of the lottery?

• A)Risk-loving decision makers will require a positive risk premium to bear risk.
• B)Risk-neutral decision makers will require a positive risk premium to bear risk.
• C)Risk-averse decision makers will require a positive risk premium to bear risk.
• D)The risk premium depends on the characteristics of the lottery, not on the characteristics of the utility function of the decision maker.

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Definitions:

Prototype

Describes an early model or initial release of a product designed to test a concept or process, serving as a typical example of a category.

Cultural Traits

Characteristics that define a particular culture, including language, religion, cuisine, social habits, music, and arts.

Tight Culture

Societal or organizational cultures characterized by strong social norms and a low tolerance for deviant behavior.

Conservative Cultural

Pertaining to cultures that prioritize traditional values and are resistant to change or new ideas.