Jenny is a gambler who has a utility function that is "more concave" or "curvier" than Tom's utility function. Who is more risk averse?

Question

Quizplus · Accepted Answer

Jenny is more risk averse than Tom because her utility function is curvier. As she is more risk averse than Tom, she loses more than Tom when risk is introduced.
Key Takeaway: Both Jenny and Tom are risk averse investors who, when faced with two investments with the same expected return but two different risks, prefer the one with the lower risk.

Jenny Is a Gambler Who Has a Utility Function That