Risk proneness Consider, again, the gamble in Figure 6.8. Now suppose that your utility function is u

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Risk proneness Consider, again, the gamble in Figure 6.8.

Now suppose that your utility function is u (x) 5 x2. Unlike the previous utility function, which gets flatter when amounts increase, this utility function gets 1/2 A

H 1/2

$2 R

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