Upon graduation, you are offered three jobs.

Which of the following is true?
A) If you're risk-neutral, you go work for Goblin Fruits.
B) If you're risk-loving, you go work for Goblin Fruits.
C) If you're risk-neutral, you go work for Samsa Exterminators.
D) If you're risk-neutral, you go work for Gradgrind Tech.

Question

Upon graduation, you are offered three jobs.

Which of the following is true?
A) If you're risk-neutral, you go work for Goblin Fruits. 
B) If you're risk-loving, you go work for Goblin Fruits. 
C) If you're risk-neutral, you go work for Samsa Exterminators. 
D) If you're risk-neutral, you go work for Gradgrind Tech.

Quizplus · Accepted Answer

The best choice for a risk-neutral individual is Gradgrind Tech. This is because the job offers the highest expected value of the three options, given that the salaries provided are the expected value of each job. Gradgrind Tech offers an expected salary of $80,000, while Goblin Fruits and Samsa Exterminators offer $90,000 and $70,000 respectively. However, Goblin Fruits has a higher level of risk associated with it, as there is a 50/50 chance of earning either $100,000 or $80,000, making it less optimal for a risk-neutral person. Samsa Exterminators are less risky than Goblin Fruits, but the expected salary is lower. Gradgrind Tech provides a higher expected salary with relatively low risk, making it the best choice for a risk-neutral person.

Upon Graduation, You Are Offered Three Jobs