Which of the Following Games Might a Risk-Averse Person Play

question 26

Multiple Choice

Which of the following games might a risk-averse person play?

• A)a game where she has a 70 percent chance of winning $1 and a 30 percent chance of losing $1
• B)a game where she has a 60 percent chance of winning $100 and a 40 percent chance of losing $100
• C)a game where she has a 60 percent chance of winning $2 and a 40 percent chance of losing $1
• D)All of the above are correct.

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Definitions:

Discretionary Spending

Expenditures made at the discretion of a business or individual, which are non-essential and can be adjusted or eliminated.

Accounting-Based Incentives

Compensation schemes for employees or executives that are tied to accounting performance measures, such as earnings or return on assets.

Executive Compensation

The total remuneration package provided to executives, including salary, bonuses, shares, options, and other benefits.

Discretion Over

Having the authority to make decisions and judgments in certain situations without the need for specific authorization.