Ivett and Brenda Are Considering Playing a Game Called Matching

question 104

Multiple Choice

Ivett and Brenda are considering playing a game called Matching Fifties. In this game, Ivett and Brenda will each place a $50 bill on the table. Both players will then toss a fair coin. If both Ivett and Brenda toss heads or if they both toss tails, Ivett wins the $100 on the table. If one woman tosses heads and the other tosses tails, Brenda wins the $100 on the table.
-Ivett decides that she is not willing to play this game because a loss of $50 to Brenda will cause her to lose more utility than she should gain if she won $50 from Brenda. Ivett would be considered __________, but if she was __________, she would be willing to play the game.

• A) risk loving; risk averse
• B) risk neutral; risk averse
• C) risk averse; risk neutral
• D) risk loving; risk neutral
• E) risk neutral; risk loving

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