Asked by Sherry Smith on Jun 12, 2024
Verified
Given uncertainty,individuals attempt to maximize their:
A) adverse selection.
B) expected utility.
C) risk aversion.
D) consumption.
Expected Utility
The anticipated satisfaction or value a person expects to receive from a particular outcome, considering all possible outcomes and their probabilities.
- Elucidate the effects of confidential information on the efficiency of economic systems and the significance of risk when making economic decisions.
- Learn about the behavior patterns of those wary of risk and their strategies for risk control.
Verified Answer
EV
Elizabeth VelasquezJun 18, 2024
Final Answer :
B
Explanation :
In the face of uncertainty, individuals attempt to make decisions that will maximize their expected utility. This means taking into account not only the potential rewards of a decision, but also the possible risks and their probabilities of occurrence. By maximizing expected utility, individuals can make the best possible decision given the information available to them.
Learning Objectives
- Elucidate the effects of confidential information on the efficiency of economic systems and the significance of risk when making economic decisions.
- Learn about the behavior patterns of those wary of risk and their strategies for risk control.
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