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18 January, 18:48

A local little league plans to invest $10,000 to host a tournament. they expect to sell $15,000 worth of tickets and concessions that weekend, but if it rains, they won't sell any tickets and will lose all of their money. the weather forecast for the weekend has a 20% chance of rain. a manager who is risk-neutral will

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  1. 18 January, 18:58
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    A local little league plans to invest $10,000 to host a tournament. they expect to sell $15,000 worth of tickets and concessions that weekend, but if it rains, they won't sell any tickets and will lose all of their money. the weather forecast for the weekend has a 20% chance of rain. A manager who is risk-neutral will invest the money and hope for the best.

    A manage who is risk-neutral has no exact preference for risk. They are not risk seekers but aren't averse to the idea of taking a risk either. Because they are so indifferent to making a choice, they have riskier payoffs that could come with accepting the challenge.
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