Upon graduation you are offered three jobs Probability of Re

Upon graduation, you are offered three jobs. Probability of Receiving Bonus 0.90 0.70 Company Salary Bonus Samsa Exterminators Gradgrind Tech Goblin Fruits 20,000 100,000 00,000 30,000 115,000 Which of the following is true? O A. If you\'re risk-neutral, you go work for Goblin Fruits OB. If you\'re risk-neutral, you go work for Gradgrind Tech. C. If you\'re risk-loving, you go work for Goblin Fruits. D. If you\'re risk-neutral, you go work for Samsa Exterminators Click to select your answer

Solution

Expected payoff for Samsa = 0.9(120000)+0.1(100000)=108000+10000=118,000

Expected payoff for Gradgrind tech = 100,000+0.7(30000)=121,000

Expected payoff of Goblin fruits= 115,000

Option B is correct response as Risk Neutral agent is not affected with the variablity part and hence should choose an option with higher expected payoffs