In general,people are willing to pay more than the expected value of insurance because:
A) they are risk-averse.
B) most people would have trouble finding enough money to cover their losses.
C) it allows them to afford major expenses from catastrophes without going bankrupt.
D) All of these statements are true.

Question

Quizplus · Accepted Answer

All of the statements are true. People pay more than the expected value of insurance because they are risk-averse, they could have trouble finding enough money to cover their losses, and insurance allows them to afford major expenses from catastrophes without going bankrupt.

In General,people Are Willing to Pay More Than the Expected