Look at the utility function graphed below and select the type of decision maker that corresponds to the graph.

A) risk player
B) risk neutral
C) risk taker
D) risk averter

Question

Look at the utility function graphed below and select the type of decision maker that corresponds to the graph.

A) risk player 
B) risk neutral 
C) risk taker 
D) risk averter

Quizplus · Accepted Answer

The utility function graph shows a linear function, which corresponds to a risk-neutral decision maker. This type of decision maker is indifferent between different levels of expected monetary outcomes and only cares about the expected value of the outcome. Therefore, the best choice for this decision maker would be solely based on the expected value.

Look at the Utility Function Graphed Below and Select the Type