A risk-averse individual prefers:
A) the utility of expected income of a risky gamble to the expected utility of income of the same risky gamble.
B) the expected utility of income of a risky gamble to the utility of expected income of the same risky gamble.
C) outcomes with 50-50 odds to those with more divergent probabilities, no matter what the dollar outcomes.
D) outcomes with higher probabilities assigned to more favorable outcomes, no matter what the outcomes are.
E) outcomes with highly divergent probabilities so that one of the outcomes is almost certain.

Question

Quizplus · Accepted Answer

A risk-averse individual prefers the utility of expected income over the expected utility of income, as they prefer certainty and are willing to accept a lower expected return to avoid risk.

A Risk-Averse Individual Prefers