Consider the Following Scenario When Answering the Following Questions

question 87

Multiple Choice

Consider the following scenario when answering the following questions:
Suppose that,in an experimental setting,100 students are presented with two situations involving risk and return.The students are first asked to choose between Gamble A and Gamble B,where:

Gamble A: The student will receive $1 million with a 100 percent probability.

Gamble B: The student will receive $1 million with an 89 percent probability,$5 million with a 10 percent probability,and $0 million (nothing) with a 1 percent probability.

The students are then asked to choose between Gamble C and Gamble D,where:

Gamble C: The student will receive $5 million with a 10 percent probability.

Gamble D: The student will receive $1 million with an 11 percent probability.
-According to the standard economic model (expected utility theory) ,a student who is risk neutral would choose Gambles ________ because they both have higher expected values than ________,respectively.

• A) A and D; B and C
• B) A and C; B and D
• C) B and C; A and D
• D) B and D; A and C
• E) B and C; A and D.

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Definitions:

Culture

The arts, beliefs, and customs that are passed down from generation to generation within a society.

Stereotyping

The act of assigning generalized attributes to individuals based on their membership in a particular group, without acknowledging individual differences.

Xenophobia

A fear or hatred of foreigners or strangers.

Pluralism

A concept in sociology and political science that acknowledges a diverse society where multiple groups maintain their independent cultural traditions.