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Question: QUESTION 1 Which of the following is true with reg...
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QUESTION 1
Which of the following is true with regard to a good decision?
It ensures that good outcomes will be obtained
It accounts for unlucky outcomes
It should be independent of the sequencing of uncertainties and decisions
It should incorporate all information about uncertainties and alternatives
All of these options
QUESTION 4
For a risk averse decision maker, the certainty equivalent is larger than the expected monetary value (EMV).
True
False
1 points
QUESTION 5
With regard to decision making, most individuals are __________________.
risk averse
risk seekers
risk maximizers
EMV maximizers
None of these options
If there is a 1% chance that one of the decision maker’s family heirlooms, valued at $5,500, will be stolen during the next year, what is the most that she would be willing to pay each year for an insurance policy that completely covers the potential loss of her cherished items?
327.28
65.89
0
55
a.It ensures that good outcomes will be obtained
b.It accounts for unlucky outcomes
c.It should be independent of the sequencing of uncertainties and decisions
d.It should incorporate all information about uncertainties and alternatives
e.All of these options
QUESTION 4
For a risk averse decision maker, the certainty equivalent is larger than the expected monetary value (EMV).
True
False
1 points
QUESTION 5
With regard to decision making, most individuals are __________________.
a.risk averse
b.risk seekers
c.risk maximizers
d.EMV maximizers
e.None of these options
Suppose that a decision maker’s risk attitude toward monetary gains or losses x given by the utility functionU(x) =
If there is a 1% chance that one of the decision maker’s family heirlooms, valued at $5,500, will be stolen during the next year, what is the most that she would be willing to pay each year for an insurance policy that completely covers the potential loss of her cherished items?
327.28
65.89
0
55
Explanation / Answer
QUESTION 1
Which of the following is true with regard to a good decision?
Answer: d. It should incorporate all information about uncertainties and alternatives
QUESTION 4
For a risk averse decision maker, the certainty equivalent is larger than the expected monetary value (EMV).
Answer: False
QUESTION 5
With regard to decision making, most individuals are
Answer: a. risk averse
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