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You have a choice between the following three options Option 1: A guaranteed $500 Option 2: 50% chance of $200 plus 50% chance of $600
You have a choice between the following three options Option 1: A guaranteed $500 Option 2: 50% chance of $200 plus 50% chance of $600 Option 3: A guaranteed $300 and a 50% chance of receiving another $500 You choose option 3. Are you risk-averse, risk-neutral, or a risk-taker? Explain using relevant economic concepts
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