Congratulations! You have just hit a $4,000 royal flush jackpot on a $1 video poker machine in Las Vegas. The machine is now offering you the chance to double your jackpot. If you accept, you and the house will each be dealt one card at random. If your card is higher, your jackpot doubles to $8,000, but if your card is lower, you win nothing. (If you tie, you and the house each get another card until someone wins.) The odds of doubling your jackpot would therefore be exactly 50 percent. If you behave as a risk averter...
a. you will take the sure $4,000 payoff.
b. you will try for the $8,000 payoff.
c. choices a and b are equally attractive.
d. you will take your winnings and bet it all on your favorite roulette number.
answer is option A
you will take the sure $4,000 payoff.
Risk averter is satisfied with the return earned. He avoids taking risk by getting attracted to the high returns. He avoids taking any chance of losing earned money and keep the earned amount safe.
Congratulations! You have just hit a $4,000 royal flush jackpot on a $1 video poker machine...