The expected utility function is useful in defining risk preference. Which of the following best defines risk preference?

Question

Accepted Answer

A risk-averse person is willing to sacrifice for certainty.

Answer

A risk-neutral person does not derive the same utility from a gamble and its expected value.

Answer

A risk-averse individual prefers the prospect itself to the expected value of a prospect.

Answer

A risk seeker would rather have the expected value of the prospect than the prospect with certainty.

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