The Blue Rooster was a restaurant near a lake.When super storm Sandy hit New Jersey,the lake overflowed and flooded the Blue Rooster.Because the restaurant had no flood insurance,it was never able to recover from the storm and closed a short time later.The owner's ______ led to the bad decision about flood insurance.
A) bounded optimization.
B) escalation of commitment.
C) risk propensity.
D) strategic maximization.
E) intuitive rationality.

Question

Quizplus · Accepted Answer

The owner's risk propensity, or willingness to take or avoid risk, led to the decision not to purchase flood insurance, which ultimately resulted in the restaurant's inability to recover from the flood damage caused by Super Storm Sandy.

The Blue Rooster Was a Restaurant near a Lake