The Idea of Risk Aversion

question 97

Multiple Choice

The idea of risk aversion

• A)is at odds with the idea of insurance.
• B)help explain the profitability of insurance companies.
• C)has nothing to do with insurance companies.
• D)help explain the losses suffers by the insurance industry.
• E)help explain why insurance companies in the long run are zero profit companies.

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Definitions:

Skepticism

An attitude of doubt or a disposition to incredulity either in general or toward a particular object.

Empirical Evidence

Information acquired by observation or experimentation that is used as a basis for knowledge in science.

Observation

The act of carefully watching and noting phenomena as they occur in order to gather data.

Operational Definition

A specific description of the terms and procedures used in a research study, allowing others to replicate the experiment.