Figure 27-3
The following figure shows the utility function for Paul.
-Refer to Figure 27-3.Suppose Paul begins with $900 in wealth.Starting from there,
A)Paul would be willing to accept a coin-flip bet that would result in him winning $200 if the result was "heads" or losing $200 if the result was "tails."
B)the pain of losing $200 of his wealth would equal the pleasure of adding $200 to his wealth.
C)the pain of losing $200 of his wealth would exceed the pleasure of adding $200 to his wealth.
D)the pleasure of adding $200 to his wealth would exceed the pain of losing $200 of his wealth.

Question

Figure 27-3
The following figure shows the utility function for Paul. 
-Refer to Figure 27-3.Suppose Paul begins with $900 in wealth.Starting from there,
A)Paul would be willing to accept a coin-flip bet that would result in him winning $200 if the result was "heads" or losing $200 if the result was "tails." 
B)the pain of losing $200 of his wealth would equal the pleasure of adding $200 to his wealth. 
C)the pain of losing $200 of his wealth would exceed the pleasure of adding $200 to his wealth. 
D)the pleasure of adding $200 to his wealth would exceed the pain of losing $200 of his wealth.

Quizplus · Accepted Answer

People generally exhibit loss aversion, meaning the pain of losing a certain amount is typically greater than the pleasure of gaining the same amount.

Figure 27-3 The Following Figure Shows the Utility Function for Paul