Cal Has a Choice Between Two Gambles

question 83

Multiple Choice

Cal has a choice between two gambles. The first gamble offers a 50 percent chance of winning $20 and a 50 percent chance of losing $20. The second gamble offers a 20 percent chance of winning $100 and an 80% chance of losing $20. Which choice has the higher expected value?

• A)The expected value of both gambles is the same, so Cal would be indifferent between the two.
• B)The expected value of the first gamble is higher.
• C)The expected value of both gambles is the same, but Cal would prefer the first gamble since the chances of winning are higher.
• D)The expected value of the second gamble is higher.

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Definitions:

Parsimonious

Describes explanations or theories that are simple and based on the fewest necessary assumptions, often preferred in scientific research for their efficiency and elegance.

Freud's Theory

Refers to the psychoanalytic theory developed by Sigmund Freud, which emphasizes unconscious processes, childhood experiences, and sexual and aggressive drives in shaping personality.

Projection

A defense mechanism in which an individual attributes their own unacceptable thoughts, feelings, or motives to another person.

Rorschach Inkblot

A psychological test in which subjects' perceptions of inkblots are recorded and then analyzed using psychological interpretation.