A risk averse person facing a risk of losing $50 might be willing to buy insurance against that risk, but would never pay more than $25 in premium charges to do so.

Question

Quizplus · Accepted Answer

A risk-averse person values peace of mind and security over the mathematical expectation of loss, so they might be willing to pay a premium even higher than $25 to avoid the risk of losing $50, especially if the loss would significantly impact their financial situation or emotional well-being.

A Risk Averse Person Facing a Risk of Losing $50