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Are you risk-seeking or risk-averse

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Question: People sometimes act in ways that differ from the way that the imaginary profit-maximizing people of economic theory are expected to act. Utility theory is one way to account for this difference. Suppose that you prefer to take a bet that offered a 50% chance of winning $80,000 and a 50% chance of getting nothing over a sure payment of $45,000. Are you risk-seeking or risk-averse? What is the risk premium?

 

 

Reference no: EM133600238

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