Consider the marginal utility of income curves of Henry, Barbara, Benjamin, and William. Henry's is constant; Barbara's is slightly diminishing; Benjamin's is strongly diminishing; and William's is upward sloping. All else equal, which of these individuals will be MOST risk averse?

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Benjamin will be the most risk-averse because he has strongly diminishing marginal utility of income. This means that he places a higher value on money when he has less of it, and as his income increases, the additional utility he receives from each additional dollar decreases rapidly. As a result, he is less willing to take risks that could potentially harm his income. Conversely, William's upward-sloping marginal utility of income suggests that he places a lower value on money when he has less of it and more value on money when he has more of it, meaning he may be more willing to take risks. Henry's constant marginal utility of income suggests he is indifferent to changes in income, while Barbara's slightly diminishing marginal utility of income puts her in the middle of the risk aversion spectrum.

Consider the Marginal Utility of Income Curves of Henry, Barbara