The utility curve given below represents the preferences of a _________________ decision maker.
A)risk averse
B)risk neutral
C)risk seeking

Question

The utility curve given below represents the preferences of a _________________ decision maker. 
A)risk averse 
B)risk neutral 
C)risk seeking

Quizplus · Accepted Answer

The utility curve is concave (bent inward) which is a characteristic of a risk averse decision maker. This means that the decision maker prefers some level of certainty and is willing to give up potential gains in order to avoid the risk of losses. Therefore, the best choice for this decision maker would be the option with the highest level of certainty, even if it means a lower potential payoff.

The Utility Curve Given Below Represents the Preferences of a _________________