John Brown’s utility of income function is U = log(I+1), where I represents income. From this information you can say that
A. John Brown is risk neutral.
B. John Brown is risk loving.
C. John Brown is risk averse.
D. We need more information before we can determine John Brown’s preference for risk.
Answer:C
John Brown’s utility of income function is U = log(I+1), where I represents income. From this information you can say that
A. John Brown is risk neutral. B. John Brown is risk loving. C. John Brown is risk averse. D. We need more information before we can determine John Brown’s preference for risk.