Consider the Following Prospects, in Which W₁ > W₂ >

Multiple Choice

Consider the following prospects, in which w₁ > w₂ > w₃; a: (1/3, 1/3, 1/3: w₁, w₂, w₃) ; b: (1/4, 1/2, 1/4: w₁, w₂, w₃) ; and c: (0, 1, 0: w₁, w₂, w₃) . Shelly reports that a is preferred to b, and that c is preferred to a.

A) Shelly is risk inclined.
B) Shelly is risk averse.
C) Shelly is risk neutral.
D) Her preferences are inconsistent with expected utility theory.