If Alan is risk-averse, then he will always
A)choose not to play a game where he has a 50 percent chance of winning $5 and a 50 percent chance of losing $5.
B)choose not to play a game where he has a 75 percent chance of winning $5 and a 25 percent chance of losing $5.
C)choose to play a game where he has a 55 percent chance of winning $5 and a 45 percent chance of losing $5.
D)choose to play a game where he has a 25 percent chance of winning $5 and a 75 percent chance of losing $5.

Question

Quizplus · Accepted Answer

Risk-averse individuals prefer to avoid risks where possible, so Alan would avoid a game with equal chances of winning or losing money, as in option A.

If Alan Is Risk-Averse, Then He Will Always