The Variance of a Lottery Is

question 36

Multiple Choice

The variance of a lottery is:

• A)the average payoff you would get from the lottery if the lottery were repeated many times.
• B)the sum of the probability-weighted squared deviations of the possible outcomes of the lottery.
• C)a measure of risk preference.
• D)the amount an agent would be willing to pay to enter a lottery.

---

Definitions:

Kuder-Richardson Reliability

A measure of the consistency of test scores across items within a test, commonly used to assess the reliability of dichotomously scored tests.

Content Validity

The extent to which a test measures all facets of the concept it intends to assess.

Construct Validity

The extent to which a test or instrument measures the theoretical construct or concept it is intended to measure.

Concurrent Validity

The degree to which the results of a test correlate with the results of an established test measuring the same construct at the same time.