What would best explain why a generally risk-averse person would bet $100 during a night of blackjack in Las Vegas?
A) Risk aversion relates to income choices only, not expenditure choices.
B) Risk-averse people may gamble under some circumstances.
C) The economics of gambling and the economics of income risk are two different things.
D) Risk-averse people attach high subjective probabilities to favorable outcomes, even when objective probabilities are known.

Question

Quizplus · Accepted Answer

Risk aversion does not mean that a person will never take a risk, but rather that they prefer a certain outcome over an uncertain one. There can be various circumstances, such as the thrill of the moment or the expectation of a positive payoff, that may cause a risk-averse person to gamble. Therefore, it is possible for a risk-averse person to bet $100 during a night of blackjack in Las Vegas.

What Would Best Explain Why a Generally Risk-Averse Person Would