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A ______Would Be Indifferent Between a Lower Certainty-Equivalent and Participating

Question 2

Multiple Choice

A ______would be indifferent between a lower certainty-equivalent and participating in a game of chance with a higher expected value; the difference between the certainty equivalent and game's expected value is the ______. As a person's behavior becomes more risk averse, his/her risk premium value increases.


A) risk neutral decision-maker, risk premium
B) risk-loving decision-maker, risk premium
C) risk averse decision-maker, risk premium
D) risk neutral decision-maker, negative risk premium
E) risk-loving decision-maker, present value of future earnings.

Correct Answer:

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