If an individual is risk averse, we would expect their marginal utility to _____ as income increases.

Question

Quizplus · Accepted Answer

If an individual is risk averse, they will experience decreasing marginal utility as income increases. This means that each additional unit of income they receive will bring them less and less additional satisfaction than the previous unit. This is because their aversion to risk leads them to value each additional dollar earned less and less as they move further away from the point of absolute security.

If an Individual Is Risk Averse, We Would Expect Their