Suppose someone knew the probability of incurring a $10,000 medical expense was 5% and the odds of being healthy and incurring no expenses was 95%. If they used that information to compare the expected cost to them ($500)with the $400 premium it would cost to get full coverage and decided not to buy the insurance then economists would say they are

Question

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Risk-loving individuals are willing to take on risk when the expected payoff is equal to or less than the certain payoff, as demonstrated by choosing not to buy insurance despite the expected cost being higher than the insurance premium.

Suppose Someone Knew the Probability of Incurring a $10,000 Medical