If an individual is risk averse, then:
A)any allocation of risk is optimal.
B)that person will always consume in a corner.
C)that person will want to buy insurance at any price.
D)that person may at times accept a bet.

Question

Quizplus · Accepted Answer

Risk-averse individuals prefer to avoid risk when possible, but they may accept a bet if the expected return is sufficiently high or if the bet is structured in a way that minimizes potential losses. This does not mean they will buy insurance at any price or always consume in a corner, and not all risk allocations are optimal for them.

If an Individual Is Risk Averse, Then