Which of the following evidence does not support the expected utility theory?
A) People assign disproportionately high weights to rare events.
B) Risk-averse people do not engage in fair bets.
C) Risk-loving people do not purchase insurance policies.
D) Risk-neutral people engage in fair bets.
A
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Cyclical unemployment results from:
A. a deficiency of spending on goods and services. B. the decreasing relative importance of goods and the increasing relative importance of services in the U.S. economy. C. the everyday dynamics of a free labor market, with workers voluntarily changing jobs. D. technological change.
A perfectly competitive firm has a random marginal cost with a 60 percent chance of a high marginal cost of $100 and a 40 percent chance of a low marginal cost of $90. What is the firm's expected marginal cost?
A) $94 B) $98 C) $92 D) $96