Which of the following describes the pseudocertainty effect? a People are more w
ID: 3064189 • Letter: W
Question
Which of the following describes the pseudocertainty effect?
a People are more willing to pay for a warranty plan that completely covers 30% of the possible problems rather than a plan that covers all problems with 30% probability.
b People are more willing to pay to reduce their risk from 10% down to zero than they are to reduce their risk from 50% down to 40%.
c All of the above.
d Rather than being offered a complete reduction of risk on certain problems and no reduction on others, you are offered a reduced risk on a variety of problems.
Which of the following is an example of a cumulative probability?
d
a The total percentage of encounters resulting in the spread of a sexually transmitted disease.Explanation / Answer
1)
a)
People are more willing to pay for a warranty plan that completely covers 30% of the possible problems rather than a plan that covers all problems with 30% probability
. is correct
2)
d) The chance of being infected with a sexually transmitted disease by the 10th independent encounter.
is correct
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