Which of the following represents the utility function of a risk lover? A)U(w)= w^1/8- 17 B)U(w)= w²+ w + 17 C)U(w)= w^1/2+ w - 17 D)U(w)= w + 17

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Quizplus · Accepted Answer

This function includes a positive linear term and a constant, which indicates that the person is willing to take on more risk in exchange for potentially higher returns. The increasing weight on U1 as wealth increases also suggests risk-loving behavior.

Which of the Following Represents the Utility Function of a Risk