Consider the Following Scenario When Answering the Following Questions

question 118

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.
-If Student 1 chose Gambles A and C,Student 2 chose Gambles A and D,and Student 3 chose Gambles B and C,which choices exhibited preference reversal?

• A) All students exhibited preference reversal.
• B) Students 1 and 2 exhibited preference reversal,but Student 3 did not.
• C) Students 1 and 3 exhibited preference reversal,but Student 2 did not.
• D) Student 1 exhibited preference reversal,but Students 2 and 3 did not.
• E) None of the students exhibited preference reversal.

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