Which of the following theories states that people who are highly risk-averse are less likely to engage in high-risk activities?
A)The theory of moral hazard
B)The theory of adverse selection
C)The propitious selection theory
D)The death spiral theory

Question

Quizplus · Accepted Answer

The propitious selection theory states that individuals who are risk-averse are less likely to engage in high-risk activities as they tend to self-select out of such activities. This theory is based on the idea that individuals with risk-averse attitudes tend to make decisions that minimize the possibility of loss, and therefore are less likely to engage in activities that they believe to be risky or that require them to take significant risks. The other options (A, B, and D) are not relevant to explaining why risk-averse individuals would avoid high-risk activities.

Which of the Following Theories States That People Who Are