Bill's utility function takes the form U(I) = exp(I) where I is Bill's income. Based on this utility function, we can see that Bill is:
A) risk averse.
B) risk neutral.
C) risk loving.
D) He can exhibit two or more of these risk behaviors under this utility function.

Question

Quizplus · Accepted Answer

Bill's utility function U(I) = exp(I) is strictly increasing and concave, which means that he is risk loving. This means that he is willing to take on more risk in order to potentially gain higher income.

Bill's Utility Function Takes the Form U(I) = Exp(I) Where