Each individual has different preferences about their consumption (whether it is a product or service) in different situation. The fact that many of situation are under uncertainty make the decision hardly to be decided. Based on individual’s preferences toward risky prospect, the type of consumer can be classified as below:
- Risk Averse (Risk-avoiding): An individual who prefer to accept a bargain with a certain payoff rather than another bargain with an expected payoff.
- Risk Loving (Risk-seeking): An individual who prefer to accept a bargain with an expected payoff rather than another bargain with a certain payoff that usually lower than expected payoff.
- Risk Neutral: An individual who is indifferent between a certain payoff and an expected payoff from two different bargain.
