The purchase of insurance and lottery tickets shows that people make decisions based on
A)expected value.
B)sample information.
C)utility.
D)maximum likelihood.

Question

Quizplus · Accepted Answer

The purchase of insurance and lottery tickets is best explained by the concept of utility. People make these decisions not just based on the expected monetary value but on the utility or satisfaction they expect to gain, which includes considerations of risk and potential outcomes. Insurance provides a sense of security and protection against potential losses, while lottery tickets offer the excitement of possibly winning a large prize, both of which are related to the concept of utility rather than just expected value, sample information, or maximum likelihood.

The Purchase of Insurance and Lottery Tickets Shows That People