A risk-averse individual would:

Question

Quizplus · Accepted Answer

A risk-averse individual would prefer a certain amount instead of taking a risk, even if the expected value of the risky prospect is the same as the certain amount. Therefore, option A is the best choice as it offers a certain amount of $5 rather than a risky prospect. Option B and C offer a risky prospect which would not be preferred by a risk-averse individual. Option D offers a higher expected value, but it is still a risky prospect and a risk-averse individual would not prefer it over a certain amount.

A Risk-Averse Individual Would