Asked by Irina Eriomov on Jun 10, 2024
Verified
A person who is willing to take a bet with a negative expected value is risk-loving.
Risk-loving
Refers to a preference for risk when making choices under uncertainty, where a greater level of risk is associated with the potential for higher rewards.
Negative Expected Value
A statistical condition where the anticipated result of an investment is less than the initial cost.
- Describe the relationship between decision-making under uncertainty and the concepts of risk aversion, risk neutrality, and risk-loving.
Verified Answer
MF
Marilyn FigueroaJun 14, 2024
Final Answer :
True
Explanation :
A person who is willing to take a bet with a negative expected value is considered risk-loving because they prefer the possibility of winning a large amount despite the higher likelihood of losing, indicating a preference for risk over the mathematical expectation of gain.
Learning Objectives
- Describe the relationship between decision-making under uncertainty and the concepts of risk aversion, risk neutrality, and risk-loving.