If the risk associated with a particular outcome is ________, or the value of a particular outcome is ________, then cost-benefit analysis might lead people to indulge in too much risk.
A) overestimated, overestimated
B) overestimated; underestimated
C) underestimated; overestimated
D) underestimated; underestimated

Question

Quizplus · Accepted Answer

If the risk is underestimated, people might not fully appreciate the potential negative consequences of their actions, leading them to take on too much risk. Similarly, if the value of an outcome is overestimated, individuals might pursue it more aggressively than is warranted, again leading to excessive risk-taking.

If the Risk Associated with a Particular Outcome Is ________