In utility analysis,a utility curve that shows a rapid increase in utility for initial amounts of money followed by a gradual leveling off for larger amount of money is appropriate for a risk _________ decision maker.
A)Seeking
B)Averse
C)Neutral
D)None of these

Question

Quizplus · Accepted Answer

A risk-seeking decision maker would have a utility curve that shows a rapid increase in utility for larger amounts of money, not leveling off. A risk-neutral decision maker would have a utility curve that is a straight line. Therefore, a rapid increase in utility for initial amounts of money followed by a gradual leveling off for larger amounts of money is most appropriate for a risk-averse decision maker.

In Utility Analysis,a Utility Curve That Shows a Rapid Increase