Consider the Following Scenario When Answering the Following Questions

question 121

Multiple Choice

Consider the following scenario when answering the following questions:
Suppose that,in an experimental setting,100 students are presented with two situations involving risk and return.The students are first asked to choose between Gamble A and Gamble B,where:
Gamble A: The student will receive $1 million with a 100 percent probability.
Gamble B: The student will receive $1 million with an 89 percent probability,$5 million with a 10 percent probability,and $0 million (nothing) with a 1 percent probability.
The students are then asked to choose between Gamble C and Gamble D,where:
Gamble C: The student will receive $5 million with a 10 percent probability.
Gamble D: The student will receive $1 million with an 11 percent probability.
-A student who is risk neutral would choose Gamble B,which has an expected value of ________,over Gamble A,which has an expected value of ________.

• A) $1.39 million; $1 million
• B) $1 million; $1.42 million
• C) $0.89 million; $1 million
• D) $1 million; $0.89 million
• E) $1.10 million; $1 million

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Definitions:

Somatosensory Cortex

A part of the brain located in the parietal lobe that processes sensory information from the body, including touch, temperature, and pain.

Motor Cortex

The motor cortex is a region of the cerebral cortex involved in the planning, control, and execution of voluntary movements.

Perceptual Hypotheses

Assumptions or inferences that individuals make about the environment based on incomplete sensory information to interpret what they perceive.

Bottom-Up Processing

An approach to processing information that starts with small details and works up to a comprehensive picture.