Risk neutral means the decision maker will feel as much pain at losing a dollar as joy at gaining a dollar.

Question

Quizplus · Accepted Answer

Risk neutrality means the decision maker does not consider the level of risk when making a decision and is only concerned with the expected outcome. This implies that they assign equal value to gains and losses of the same amount, thus feeling the same amount of pain at losing a dollar as joy at gaining a dollar, making them risk neutral.

Risk Neutral Means the Decision Maker Will Feel as Much