A decision maker has a utility function This decision maker is
A) risk-averse.
B) risk-neutral.
C) risk-loving.
D) risk-gaining.

Question

A decision maker has a utility function  This decision maker is
A) risk-averse. 
B) risk-neutral. 
C) risk-loving. 
D) risk-gaining.

Quizplus · Accepted Answer

The utility function of the decision maker exhibits decreasing marginal utility of wealth, meaning that the decision maker is risk-averse. This implies that they would prefer a certain outcome with a lower payoff over a risky outcome with a higher expected payoff.

A Decision Maker Has a Utility Function This Decision