For most people in the West, $10,000 is a negligible fraction of their lifetime wealth, so it is not rational to be anything other than risk-neutral about it. But User:Kevin needs his $5,800 as soon as the election ends, not over his lifetime. He may or may not be risk-averse, but he is definitely liquidity-constrained.
To the downvoter: If you don’t believe that risk-neutrality is rational for relatively small sums of money, I’ve got some extended warranties to sell you. And if it was legal, I’d throw in some tickets for the local numbers bank as an alternative.
Don’t forget about liquidity constraints.
For most people in the West, $10,000 is a negligible fraction of their lifetime wealth, so it is not rational to be anything other than risk-neutral about it. But User:Kevin needs his $5,800 as soon as the election ends, not over his lifetime. He may or may not be risk-averse, but he is definitely liquidity-constrained.
To the downvoter: If you don’t believe that risk-neutrality is rational for relatively small sums of money, I’ve got some extended warranties to sell you. And if it was legal, I’d throw in some tickets for the local numbers bank as an alternative.