Suppose That,in an Experimental Setting,100 Students Are Asked to Choose

question 67

Multiple Choice

Suppose that,in an experimental setting,100 students are asked to choose between Gamble A and Gamble B,where:
Gamble A: The student will receive $5 million with a 100 percent probability.
Gamble B: The student will receive $5 million with a 50 percent probability,$10 million with a 25 percent probability,and $0 million (nothing) with a 25 percent probability.
A risk-neutral student is

• A) likely to choose Gamble A because it has a higher expected value.
• B) likely to choose Gamble B because it has a higher expected value.
• C) likely to choose Gamble A because the student will win something (as opposed to nothing)with a higher probability.
• D) likely to choose Gamble B because the student will win something (as opposed to nothing)with a higher probability.
• E) indifferent toward both Gambles A and B because they have the same expected value.

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Definitions:

Prevented Industrialization

The hindrance or delay of the industrial development process in a country or region, often due to external or internal factors.

Colonization

The act of establishing control over a foreign land and its people by a country or group, often leading to exploitation and cultural assimilation.

Abundant Natural Resources

The availability of a large quantity of natural materials that can be utilized for economic gain, such as minerals, forests, and water.

Long Hours

Working time that extends beyond the typical or standard working hours, often associated with high demands and stress.