<p>A risk averse is given this: Option1: 1000 with p=0.25 and 100 with p=0.75. Option 2: 325 for sure. Which option would he choose?
For this part, I know the person will choose option 2 over option 1.
However, the question continues,change to $320 for sure, what would be his choice?</p>

<p>Anyone can guide?please </p>

CC BY-SA 3.0
2015-05-03T15:43:24.350Z
I'm voting to close this question as off-topic because it is a homework question without effort shown.
FooBar
CC BY-SA 3.0
2015-05-03T15:44:25.980Z
@FooBar Please la I have shown my answer for first part because the risk averse individual prefers safer option with same value than riskier option with same value. However, I am not sure second part
UnusualSkill
CC BY-SA 3.0
2015-05-03T17:34:44.190Z
There is insufficient information to answer. You need additional information about the preferences, such as the consumer's Neumann-Morgenstern utility function or other choices. Also, FooBar was correct: you should always immediately state that what you are posting is a homework question, and then show effort in the question itself, not in a comment afterwards. You should edit your question accordingly.
Giskard
CC BY-SA 3.0
2015-05-05T15:22:29.223Z
This question can be reopened as noted if it is edited to meet community standards. Please consider adding additional information, and further explaining your work.
Jason Nichols
<microeconomics>
Risk and uncertainty
UnusualSkill
# Risk and uncertainty

(Asked by: username_0 on 2015-05-03)

A risk averse is given this: Option1: 1000 with p=0.25 and 100 with p=0.75. Option 2: 325 for sure. Which option would he choose?
For this part, I know the person will choose option 2 over option 1.
However, the question continues,change to $320 for sure, what would be his choice?

Anyone can guide?please

**Tags:** microeconomics
> **Comments:**
> **username_1**: I'm voting to close this question as off-topic because it is a homework question without effort shown.  
> **username_0**: @FooBar Please la I have shown my answer for first part because the risk averse individual prefers safer option with same value than riskier option with same value. However, I am not sure second part  
> **username_2**: There is insufficient information to answer. You need additional information about the preferences, such as the consumer's Neumann-Morgenstern utility function or other choices. Also, FooBar was correct: you should always immediately state that what you are posting is a homework question, and then show effort in the question itself, not in a comment afterwards. You should edit your question accordingly.  
> **username_3**: This question can be reopened as noted if it is edited to meet community standards. Please consider adding additional information, and further explaining your work.  

---

## 0 answers

