You have saved a total of $200,000 over the past several years. Jane, a trusted business associate, recently approached you with an offer. She has offered you a partnership in a new ﬁrm that she
Expects to be exceedingly proﬁtable. Your initial investment in the partnership would be $125,000.
However, Jane cannot give you any odds on that success occurring. You have decided to keep your
$125,000 and forego this opportunity simply because you don't know the probability of success.
Which one of the following behavior characteristics do you have?
A) Aversion to ambiguity.
B) Recency bias.
C) Sentiment-based risk aversion.
D) Clustering illusion.
E) Money illusion.

Question

Quizplus · Accepted Answer

This person is exhibiting aversion to ambiguity, which means they are uncomfortable making decisions when there is uncertainty or lack of information. In this case, the individual is not willing to take the risk because they do not have any information on the likelihood of success for the new firm.

You Have Saved a Total of $200,000 Over the Past