Chapter 1
100
Uncertainty concerning a future outcome.
What is risk?
200
The probability that an event will occur.
What is chance of loss?
300
The average outcome of the a risky situation if it is repeated over and over again.
What is expected value?
400
The characteristic of an individual that makes them willing to pay more than the expected loss to get rid of a risk.
What is risk aversion?
500
This is illustrated by a person who doesn't bother to lock his car doors because he knows he has insurance if his car is stolen.
What is morale hazard?
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