Question

In: Economics

Most people buy insurance because they a. are risk lovers b. enjoy the gamble c. are...

Most people buy insurance because they

a. are risk lovers

b. enjoy the gamble

c. are risk neutral

d. are risk averse

Solutions

Expert Solution

  • Option d is the answer  
  • Most people buy insurance because they are risk averse.
  • People always like to lead a safe and healthy life. Thus people show reluctance to take risks; ie, risk averse. Such that they will prefer insurances to avoid the risks of not being insured. In most of the cases, insurance will provide compensations for the encountered loss.

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