Mary and Bob are trying to decide how much auto insurance to buy. They share the same expectations of an accident, with the same dollar loss. They also have the same income levels. However, Mary would rather buy very little insurance, while Bob would rather buy much more insurance. This suggests that:
A) Bob is more risk-averse than Mary.
B) Mary is more risk-averse than Bob.
C) Bob is risk-averse and Mary is risk-loving.
D) Mary is risk-averse and Bob is risk-loving.

Question

Quizplus · Accepted Answer

Bob's preference for more insurance indicates he is more risk-averse, while Mary's preference for less insurance suggests she is less risk-averse.

Mary and Bob Are Trying to Decide How Much Auto