Final answer:
The manager in question is risk loving, as they prefer a gamble with a chance of higher gains over a guaranteed amount, despite the risks involved.
Step-by-step explanation:
The subject in question concerns the attitude of a manager towards risk when making a financial decision. Specifically, it involves determining whether the manager is risk loving, risk averse, or risk neutral based on their preference for different monetary outcomes with associated probabilities.
In this case, the manager prefers a 20 percent chance of receiving $1,400 and an 80 percent chance of receiving $500 over receiving $680 for sure. This preference for a gamble over a certain outcome indicates that the manager is risk loving.
We understand that a risk averse individual would prefer a certain outcome over a gamble with a higher expected value, and a risk neutral person would be indifferent between the gamble and the certain outcome if the expected values are the same.