Exam 2: Risk and Uncertainty

A community is faced with making a decision about a development project that will bring much-needed housing and jobs. Unfortunately the development project has not factored in erosion that may affect the river that runs through town. The town is split on the decision. The certain payoff is jobs and housing. The uncertain payoff is how this development project will affect the river. Those who prefer to move ahead with the development project are considered to be

Categorize the following people in relation to risk: Person 1: Given two investments with different levels of riskiness, considers only the expected return from each investment Person 2: Given two investments with the same return and different levels of risk, chooses the less risky investment Person 3: Given two investments, more likely to invest in a new, unknown company over investing in a well-known and trusted company

An investor is faced with a decision of investing $5,000. The investor is in no hurry to cash in on their gains and is considered risk-averse. Which option should they choose?

Choose the correct interpretation of the charts below. (Note: The x-axes represent the benefit; the y-axes represent the utility.) Chart A Chart B

Current energy resources from fossil fuels have finite limits. Humans continue to consume energy at high levels. With growing populations more energy will be needed. Which of the following is the best solution?

Suppose you are in charge of holding a series of meetings with various groups, businesses, and government officials to devise a plan to deal with high levels of arsenic in the water supply. Your town has not had to use this water supply yet but estimates indicate that since the town population is growing, the water will be needed within the next 15 years. What guidelines could you establish to avoid some of the disagreements that may occur in decision-making?

Describe perceived risk and give an example.

Which of the following statements about excessive discounting is false?

People tend to be risk-averse when

_______ choices about environmental problems involve _______.

Do you feel framing is beneficial or can it be used negatively? Compare and contrast the use of framing.

On March 11, 2011, an earthquake and resulting tsunami caused the Fukushima Daiichi Nuclear Power Station to be shut down. There were fears of a major nuclear meltdown. This event was in the media all over the world. As with most situations like this there were reports of serious problems and conflicting reports that the problems would be controlled and were not serious. If the general opinion of nuclear energy had taken a positive turn in the world, a situation like this may influence opinions of the risk involved in nuclear energy. This is an example of what category of error?

Community activists want to get residents of a town to support legislation that bans a pesticide that the activists feel is harmful to human health. The town depends on agriculture for jobs. The education level of the town is low and the poverty level is high. The pesticide in question has shown to increase crop production and more farmers are using it because it allows them to grow more and hire more people. There are scientific studies that show that the pesticide is harmful if those working in the fields do not take certain precautions such as protective clothing. The best way for the activists to persuade the residents to support the legislation would be to

_______ is a state of uncertainty where some of the possibilities involve a loss, catastrophe, or other undesirable outcome.

Recent news about fires due to droughts and excessively high temperatures in parts of the United States and flash floods in Eastern Europe are events that might cause people to _______ when making environmental decisions regarding climate change.