Are risk-averse people more likely to order their steak well-done? A survey was conducted that asked individuals a series of questions about risk and how the individual prefers their steak (if at all). In particular, one question asked respondents, "Consider the following hypothetical situations: In Lottery A, you have a 50 percent chance of success, with a payout of $100. In Lottery B, you have a 90 percent chance of success, with a payout of $20. Assuming you have $10 to bet, would you play Lottery A or Lottery B?" Raw data from 412 American steak eaters are presented in our StatCrunch Group. The data set is called "Steak Preference."
Here is Row Percent
Lottery A Lottery B Total
Medium 73, 57.48% 54, 13.11% 127, 30.83%
Medium R 70,16.99% 88, 21.36% 158, 38.35%)
Medium W 33, 8.01% 37 (8.98%) 70(16.99%)
Rare 9 (2.18%) 13(3.16%) 22 (5.34%)
Well 16 (3.88%) 19(4.61%) 35 (8.5%)
Total 201 (48.79%) 211(51.21%) 412(100%)
a) Specifically define the meaning of the row percentage found in the "Medium Rare" and "Lottery A" cell of each table. Note that there are 70 individuals in that cell.
c) Overall, are risk-averse people (those choosing Lottery B) more likely to order their steak well-done? Answer this question and provide a one sentence explanation.