1. Uncertainty averse means that individuals prefer certain choice to uncertain choice.

o or x

2. Suppose that there are three choices: (1) you get $100 for sure, (2) you get $200 with 50%, otherwise nothing, and (3) you get $200 with an unknown probability, otherwise nothing. Uncertainty averse means:

a.

people prefer (1) to (2).

b.

people prefer (2) to (3).

c.

people prefer (1) to (3).

d.

all of the above.