For a risk averse person,
A)the pleasure of winning $1,000 on a bet exceeds the pain of losing $1,000 on a bet.
B)the pain of losing $1,000 on a bet exceeds the pleasure of winning $1,000 on a bet.
C)the utility function exhibits the property of increasing marginal utility.
D)the utility function gets steeper as wealth increases.

Question

Quizplus · Accepted Answer

A risk-averse person prefers to avoid losses rather than to achieve gains. Therefore, the pain of losing $1,000 on a bet exceeds the pleasure of winning $1,000 on a bet.

For a Risk Averse Person