Consider a Risk-Averse Individual Whose Initial Situation Is a Risk-Free

Multiple Choice

Consider a risk-averse individual whose initial situation is a risk-free basket of outcomes.How does this person react when he is offered a wager at favorable odds?

A) He always declines the wager.
B) He always accepts the wager.
C) He accepts the wager only if it is sufficiently small.
D) He accepts the wager only if it is sufficiently large.