When Sardar Buys Insurance, on Net He

question 5

Multiple Choice

When Sardar buys insurance, on net he

• A) gains if the value of the insurance is greater than the price he pays the insurance company.
• B) loses because the price must pay the insurance company lowers his expected utility.
• C) gains because his actual wealth with the insurance is greater than his expected wealth without the insurance.
• D) loses if the price of the insurance equals his expected loss from a bad outcome.

---

Definitions:

CS

Conditioned Stimulus; in conditioning, a previously neutral stimulus that, after association with an unconditioned stimulus, comes to trigger a conditioned response.

UCS

Unconditioned Stimulus refers to a stimulus that naturally brings about a particular response without a prior learning process.

Conditioned Emotional

An emotional response that has been learned through conditioning, where a neutral stimulus becomes associated with an emotional event.

Fear Response

A physiological reaction to perceived threats that prepares the body for fight or flight.