Lotteries a and B Have the Same Expected Value, but B

question 71

Multiple Choice

Lotteries A and B have the same expected value, but B has larger variance. Which of the following statements is true, all else equal?

• A)If the decision maker is risk averse, lottery A will have the larger risk premium.
• B)If the decision maker is risk neutral, lottery B will have the larger risk premium.
• C)If the decision maker is risk loving, both lotteries will have a positive risk premium.
• D)If the decision maker is risk averse, lottery B will have the larger risk premium.

---

Definitions:

Ethnic Minority

A group within a larger society that is distinguished by racial, linguistic, or cultural heritage, often facing different treatment or discrimination.

Ethnic Majority

The sociocultural group within a society that holds the majority of power and influence, often setting societal norms and standards.

Group Identity

The sense of belonging to a specific social group, often accompanied by a strong emotional connection and adherence to group norms and values.

Stereotypes

Oversimplified generalizations about groups of people that may or may not reflect their actual characteristics or behaviors.