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Expected Income
The weighted average of all possible income outcomes, where the weights are the probabilities of each outcome occurring.
Probability
A measure of the likelihood of a particular event or outcome, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.
Expected Utility
A theory in economics that calculates the utility expected from a risky or uncertain choice, aiming to maximize satisfaction.
Risk-averse
A characteristic of individuals who prefer to avoid taking risks and are likely to choose options that minimize uncertainty.
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