Consider the following information about job opportunities for new college graduates in Megalopolis:Table 5.1

-Refer to Table 5.1. A risk-averse student making a decision solely on the basis of the above information:
A) would definitely become a math major.
B) would definitely not become an English major.
C) would definitely become a political science major.
D) might be either a mathematics major or English major, depending upon the utility of the average offer.
E) would definitely be indifferent between the accounting major and the English major if the probability of finding a job in accounting were any value higher than 0.95.

Question

Consider the following information about job opportunities for new college graduates in Megalopolis:Table 5.1
 
-Refer to Table 5.1. A risk-averse student making a decision solely on the basis of the above information:
A) would definitely become a math major. 
B) would definitely not become an English major. 
C) would definitely become a political science major. 
D) might be either a mathematics major or English major, depending upon the utility of the average offer. 
E) would definitely be indifferent between the accounting major and the English major if the probability of finding a job in accounting were any value higher than 0.95.

Quizplus · Accepted Answer

A risk-averse student would want to choose a major that provides the highest average salary offer. Looking at the table, the highest average salary offer is for mathematics majors, followed closely by accounting majors. However, it is important to consider the variability of job opportunities as well. Mathematics majors have a higher variability in job offers than accounting majors, which may make them less attractive to a risk-averse student. Therefore, the student might choose to become an accounting major if they value consistency in job offers. However, if the student values the potential for high earnings and is willing to take on more risk, they might choose to become a mathematics major. Therefore, the best choice for a risk-averse student is D, as they might choose to become either a mathematics major or an accounting major depending on their individual preferences for risk and earnings potential.

Consider the Following Information About Job Opportunities for New College