A state lottery commission offers a new millionaire game - a one in a million chance to win one million dollars.If the price of a lottery ticket is $1.50,who would buy any?
A) Only risk-neutral individuals.
B) Only risk-preferring individuals.
C) Both risk-neutral and risk-preferring individuals.
D) Anyone,risk preferences would not matter.

Question

Quizplus · Accepted Answer

Risk-preferring individuals are more likely to buy a lottery ticket because they are willing to take the risk for the chance of a large payoff, despite the negative expected value of the lottery ticket.

A State Lottery Commission Offers a New Millionaire Game -