Asked by stacie Johnson on May 08, 2024
Verified
A person who prefers a certain payoff over an uncertain one with the same expected value is risk-averse.
Risk-averse
A description of an investor or decision-maker who prioritizes minimizing risk over achieving potentially higher gains.
Certain Payoff
A guaranteed outcome or return from an investment, where the investor has absolute certainty over the amount to be received.
- Elucidate the connection between attitudes towards risk (risk aversion, risk neutrality, and risk-loving) and decision-making in uncertain conditions.
Verified Answer
KF
Kiera FreemanMay 09, 2024
Final Answer :
True
Explanation :
A person who prefers a certain payoff over an uncertain one with the same expected value demonstrates risk aversion, as they prioritize security over the possibility of higher gains due to the uncertainty involved.
Learning Objectives
- Elucidate the connection between attitudes towards risk (risk aversion, risk neutrality, and risk-loving) and decision-making in uncertain conditions.