Consider the following scenario to answer the questions that follow.
Ivett and Brenda are considering playing a game called Matching Fifties. In this game, Ivett and Brenda will each place a $50 bill on the table. Both players will then toss a fair coin. If both Ivett and Brenda toss heads or if they both toss tails, Ivett wins the $100 on the table. If one woman tosses heads and the other tosses tails, Brenda wins the $100 on the table.
-Ivett decides that she is not willing to play this game because a loss of $50 to Brenda will cause her to lose more utility than she should gain if she won $50 from Brenda.Ivett would be considered risk ________,but if she was risk ________,she would be willing to play the game.
A) loving; averse
B) neutral; averse
C) averse; neutral
D) loving; neutral
E) neutral; loving

Question

Quizplus · Accepted Answer

Ivett is showing risk aversion, meaning she is not willing to take on any risk of loss. If she were risk neutral, she would be willing to take the risk, but since she is valuing the potential loss more than the potential gain, she is risk averse. The answer choice that reflects this is C - averse; neutral.

Consider the Following Scenario to Answer the Questions That Follow