If we assume that the decision maker is risk-averse, then we can conclude that the economic nature of risk is that its presence increases the desirability of a given undertaking or investment project.

Question

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If the decision maker is risk-averse, the economic nature of risk is that its presence decreases the desirability of a given undertaking or investment project. Risk-averse individuals prefer to avoid risky investments and prefer to invest in low-risk projects with guaranteed returns.

If We Assume That the Decision Maker Is Risk-Averse, Then