Lotto 6/49, cont. Assume still that your utility function is u(x)5 !x, that the probability of winning at Lotto 6/49 is one in 13,983,816, and that the prize is a million dollars.

(a) What is the expected utility of holding a Lotto ticket?

(b) What is the expected utility of the dollar you would have to give up in order to receive the Lotto ticket?

(c) Which would you prefer?