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MicroF99-I.6

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Question from Past Microeconomics Qualifying ExamEdit

Fall 1999- Section I, Question six, George Mason University

True, False, Uncertain. Determine whether or not each of the following statements are true or false. Explain your reasoning briefly in a paragraph or two. (The explanation is often more important than the answer given). Include a carefully labeled diagram or game matrix if it helps to clarify your answer.


If Al is indifferent between playing and not playing a fair lottery, Al must be risk neutral.

AnswerEdit

A person is said to be risk neutral if he is generally indifferent between accepting or refusing a fair gamble, because the expected utility of accepting is the same as the certain utility of refusing


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