Catherine Is Risk Averse

question 53

Multiple Choice

Catherine is risk averse.When faced with a choice between a gamble and a certain level of wealth she will

• A) always prefer the gamble.
• B) always prefer the certain level of wealth.
• C) prefer the gamble if the expected utility from it is higher than the utility from the certain level of wealth.
• D) prefer the certain level of wealth if the expected utility from the gamble is higher than the utility of the certain level of wealth.

---

Definitions:

Flashlight

A portable, battery-operated device used for illumination.

Dial

A control or mechanism on a device for adjusting settings or tuning.

Clustering

A process of grouping a set of objects in such a way that objects in the same group are more similar to each other than to those in other groups.

Flashbulb Memory

An extremely precise and vivid memory of the moment and the surrounding circumstances when one hears surprising, significant, or emotionally stimulating news.