In an Experiment on Risk Aversion and Inconsistency, a Group

question 17

Multiple Choice

In an experiment on risk aversion and inconsistency, a group of people were given the following choice: A) Lose $100 with certainty, or B) 50% chance to win $50, 50% chance to lose $200.Which of the following scenarios is most accurate and would most likely occur?

• A)A majority chose option A.Option A has a lower expected loss.
• B)A majority chose option B.Option A has a lower expected loss.
• C)A majority chose option A.Option B has a lower expected loss.
• D)A majority chose option B.Option B has a lower expected loss.
• E)Roughly equal numbers chose A and B, because they have equal expected losses.

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Definitions:

Standard Deviation

A measure of the extent to which a set of scores vary on either side of their mean value. The square root of variance. See also standard error.

Individual Score

The specific performance or result attained by an individual in an assessment or evaluation.

Dependent Samples

Pairs or groups of observations in a study that are related or matched in some way.

Normal Curve

Curve resulting from the plot of values with a normal distribution. It is often called a bell curve because of its shape.