Which of the following utility functions would indicate the most (relative)risk averse behavior?
A)U(W)= W.
B)U(W)= $\sqrt { W }$ .
C)U(W)= ln W.
D)U(W)= -1/W.

Question

Quizplus · Accepted Answer

A utility function that is decreasing would represent risk-averse behavior as it suggests that the marginal utility of wealth decreases as wealth increases. Option D is the only decreasing function listed, indicating the most risk-averse behavior.

Which of the Following Utility Functions Would Indicate the Most W\sqrt { W }W​

Which of the Following Utility Functions Would Indicate the Most $\sqrt { W }$