A risk-averse agent
A)only cares about expected payoff.
B)cares about expected payoff as well as the variability of a payoff.
C)only cares about the variability of a payoff.
D)does not care about expected payoff.

Question

Quizplus · Accepted Answer

A risk-averse agent cares about not only the expected payoff but also the variability of that payoff. This is because they want to avoid losses and therefore prefer outcomes with less variability.

A Risk-Averse Agent