When the decision maker prefers a guaranteed payoff value that is smaller than the expected value of the lottery, the decision maker is
A) a risk avoider.
B) a risk taker.
C) an optimist.
D) an optimizer.

Question

​When the decision maker prefers a guaranteed payoff value that is smaller than the expected value of the lottery, the decision maker is
A) ​a risk avoider.
B) ​a risk taker.
C) ​an optimist.
D) ​an optimizer.

Quizplus · Accepted Answer

A risk avoider prefers certainty and is willing to accept a lower guaranteed payoff rather than face the uncertainty of a lottery with a higher expected value.

​When the Decision Maker Prefers a Guaranteed Payoff Value That

When the Decision Maker Prefers a Guaranteed Payoff Value That