Assume That Odds of a New Computer Requiring Any Type

Multiple Choice

Assume that odds of a new computer requiring any type of service in the first two years are less than 1 in 10 000, and the average cost any computer service calls is only $120. However, Karen pays $300 for a two-year service contract on her new computer. She explains that her peace of mind is well worth the cost of the contract. What is Karen using to make her decision to purchase the service agreement, in this case?

A) noncompensatory factors
B) subjective probability
C) expected value
D) subjective utility