Uncertainty and Consumer Behavior Risk Aversion Risk Averse: An individual who prefers a sure amount of SM to a risky prospect with an expected value, ex, of SM Risk loving: An individual who prefers a risky prospect with an expected value, E[x], of SM to a sure amount of $M. Risk Neutral. an individual who is indifferent between a risky prospect where E[x]=$M and a sure amount of $M Michael R Baye, Managerial Economics and Business Strategy, 3e. CThe McGraw-Hill Companies, Inc, 1999Michael R. Baye, Managerial Economics and Business Strategy, 3e. ©The McGraw-Hill Companies, Inc. , 1999 Uncertainty and Consumer Behavior Risk Aversion  Risk Averse: An individual who prefers a sure amount of $M to a risky prospect with an expected value, E[x], of $M.  Risk Loving: An individual who prefers a risky prospect with an expected value, E[x], of $M to a sure amount of $M.  Risk Neutral: An individual who is indifferent between a risky prospect where E[x] = $M and a sure amount of $M