Question

Sharon is given two options. Option 1 allows her to take $5. Option 2 allows her a 1/3 chance of winning $50, but she risks losing $10, 2/3 of the time. Sharon chooses option 1. What best describes Sharon?

A. risk-averse
B. risk-neutral
C. gambling-averse
D. risk-seeing

Answer 1

A. Risk Adverse

Step-by-step explanation:

A Risk adverse person is a person which at all times is ready to take a small amount of money than than taking risk that might result to such person having or winning a higher sum.

Sharon's decision to take the $5 bet instead of taking the risk of getting $50 with the probability of losing up to $10 shows that she is a risk adverse (i.e she is reluctant to take risks )