The Fact That We Observe a Trade-Off Between Risk and Return

question 173

True/False

The fact that we observe a trade-off between risk and return is puzzling to economists, because that observation conflicts with the notion that most people are risk averse.

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Definitions:

Dichotomy Corollary

A principle in psychology, particularly within George Kelly's personal construct theory, suggesting that a person's construction system is composed of dichotomous constructs, meaning it is organized into two mutually exclusive categories.

Bipolar

A disorder characterized by episodes of mood swings ranging from depressive lows to manic highs.

Personality Theory

A branch of psychology that attempts to explain patterns of thoughts, feelings, and behaviors that make a person unique, through various theoretical perspectives.

Organizational Corollary

A principle related to how individuals structure and organize their perceptions and cognitions in a complex environment.