Consider the following scenarios. a. Scenario one has two options available.
Option A: There is a 50% chance of winning $1,000 and a 50% chance of winning $0.
Option B: There is a 100% chance of receiving $500.
A risk-averse person (Click to select) will choose option A will choose option B will be indifferent between options A and B might choose option A or might choose option B .
b. Scenario two has two different options available.
Option C: There is a 40% chance of winning $90 and a 60% chance of winning $110.
Option D: There is a 100% chance of winning $90.
A risk-averse person (Click to select) will choose option C will choose option D will be indifferent between options C and D might choose option C or might choose option D .
c. Scenario three has two more options available.
Option E: There is a 50% chance of winning $0 and a 50% chance of winning $100.
Option F: There is a 50% chance of winning $20 and a 50% chance of winning $60.
A risk-averse person (Click to select) will choose option E will choose option F will be indifferent between options E and F might choose option E or might choose option F .