Risk Neutrality Implies A

question 18

Multiple Choice

Risk neutrality implies a:

• A) constant marginal utility of income.
• B) diminishing marginal utility of income.
• C) increasing marginal utility of income.
• D) constant utility of income.

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Definitions:

Incentive Theories

Incentive theories suggest that behavior is motivated by a desire for external rewards or incentives.

Drive Theories

Theories suggesting that behavior is motivated by the desire to reduce internal tension caused by unmet biological needs.

Social Motives

The psychological forces that drive individuals to interact, affiliate, or connect with others.

Evolutionary Perspective

A way of looking at human behavior and mental processes by examining them in terms of evolutionary principles or natural selection.