Final answer:
The logarithmic utility function U(I) = ln(I) represents a person with risk-averse preferences, as it reflects the diminishing marginal utility of wealth, a characteristic of risk aversion.
Step-by-step explanation:
The utility function that represents a person with risk-averse preferences is C) U(I) = ln(I). A risk-averse individual prefers to avoid uncertainty and is characterized by a concave utility function, meaning that each additional unit of income or wealth provides a smaller incremental increase in utility. Options A) U(I) = √(I) and C) U(I) = ln(I) both reflect concave functions, but the natural logarithm function is most commonly associated with representing risk aversion in economics. The logarithmic utility function shows diminishing marginal utility for wealth, which aligns with risk-averse behavior, as the individual gets less additional satisfaction from each extra unit of income or wealth. Therefore, out of the given options, the logarithmic utility function most accurately represents risk aversion.