Respuesta :
The given statement is true. if Darnell is risk averse, then he prefers a 50-50 gamble between $0 and $400 over a guaranteed $200.
Will a risk averse person accept a fair gamble?
The idea of a fair bet is related to the idea of risk aversion. An unknown prospect with a zero projected yield is a fair bet. If a person never accepts a reasonable wager, they are risk averse. The overwhelming majority of academics concur that scenarios involving gambling involve some type of risk aversion.
While some people actively love risk (i.e., seek out risky circumstances because of the possible rewards), the majority of people deliberately avoid risk. One response is that it seems sense that the benefits of wealth diminish over time. Additionally, risk aversion is probably fairly widespread because diminishing returns to wealth imply that it is.
Hence, The given statement is true. if Darnell is risk averse, then he prefers a 50-50 gamble between $0 and $400 over a guaranteed $200.
To learn more about risk aversion refer to:
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