Susan is indifferent between $500 for sure and a bet with a 60% chance of $400 and a 40% chance of $700.Susan is:

Question

Quizplus · Accepted Answer

Susan is indifferent between a certain $500 and a risky bet with expected value of $520 ($400*0.6 + $700*0.4 = $520), which implies that she has a lower risk tolerance than average, i.e. she is risk-averse. Therefore, the best choice for her would be to take the $500 for sure.

Susan Is Indifferent Between $500 for Sure and a Bet