Business, 05.05.2020 05:00 lilquongohard

Why do people often want to insure fully against uncertain situations even when the premium paid exceeds the expected value of the loss being insured against? A. Assuming risk-averse individuals, the decrease in utility from a loss is greater than the increase in utility from a gain because of diminishing marginal utility. B. Assuming the consumer's objective is to maximize expected utility, one must conclude that people are not always rational. C. Assuming risk-averse individuals, the decrease in utility from a loss is greater than the increase in utility from a gain because of increasing marginal utility. D. Assuming the consumer's objective is to maximize expected utility, only if they are extremely risk averse is it rational for them to pay a higher premium to avoid a loss.

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