Equation (14.35) gives the value of p3 that is required in order for the choice problem to

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Equation (14.35) gives the value of p3 that is required in order for the choice problem to have threshold risk attitude r ∗, assuming EU. Applying (14.35) to our three values of r ∗ gives rise to the three choice problems presented in Figure 14.2.As required the three probabilities computed in (14.33) are in agreement with the three required percentage points.

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