Individuals differ in risk aversion because of:
A)adverse selection.
B)moral hazard.
C)differences in income or wealth.
D)differences in their insurance.

Question

Quizplus · Accepted Answer

Differences in income and wealth can affect an individual's willingness to bear risk. Those with higher income or wealth may be more willing to take risks, while those with lower income or wealth may be more risk-averse. Adverse selection and moral hazard refer to issues in insurance markets and are not directly related to individual differences in risk aversion. Differences in insurance may affect how individuals bear risk, but this is not a primary determinant of risk aversion.

Individuals Differ in Risk Aversion Because Of