People tend to make _____ choices when the stakes are large and _____ choices when the stakes are small.

Question

Quizplus · Accepted Answer

Risk-aversion is when people tend to make safer choices when there is a lot to lose, while nearly risk-neutral choices are made when there is less at stake. This is because people are more willing to take risks when the possible loss is less severe. Therefore, B is the best choice as it correctly identifies both the risk-averse and nearly risk-neutral choices.

People Tend to Make _____ Choices When the Stakes Are