Tim Is Offered Two Gambles

question 43

Multiple Choice

Tim is offered two gambles. With gamble A, he either gains $2 or loses $1 with a 50 percent probability. With gamble B, he either gains $3 or loses $2 with a 50 percent probability. Tim prefers gamble B to gamble A. What can we conclude?

• A) Tim is risk loving.
• B) Tim is risk neutral.
• C) Tim is risk averse.
• D) Insufficient information to determine.

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Definitions:

Reactivated Need

A previously satisfied need that becomes active again due to changes in circumstances or environment.

Esteem Needs

Esteem needs are a human's desire for respect, self-esteem, and recognition from others, as posited in Maslow's hierarchy of needs.

Promotion

The act of raising someone to a higher position or rank, often accompanied by increased responsibilities and benefits.

ERG Theory

Clayton Alderfer's motivation theory that divides human needs into three categories: Existence, Relatedness, and Growth.