A risk averse consumer ignores risk and makes his/her decisions solely on the basis of expected value.

Question

Quizplus · Accepted Answer

A risk averse consumer is someone who is sensitive to risk and is willing to pay a premium to reduce it. They do not ignore risk, but rather take it into account when making decisions. They may choose an option with a lower expected value but less risk over an option with a higher expected value but more risk.

A Risk Averse Consumer Ignores Risk and Makes His/her Decisions