State- dependent preferences depend on:
A)state income tax laws.
B)subjective probabilities.
C)observed probabilities.
D)perfect information.

Question

Quizplus · Accepted Answer

State-dependent preferences refer to an individual's preference for a decision depending on the state of the world at the time the decision is made. This state can be subjective probabilities (option B) that are based on an individual's personal beliefs and expectations about the future. State income tax laws (option A) and observed probabilities (option C) are not relevant factors in state-dependent preferences. Perfect information (option D) is also not necessarily relevant as state-dependent preferences are based on an individual's perception of the future rather than perfect knowledge of it.

State- Dependent Preferences Depend On