8.2 Show that if an individuals utility-of-wealth function is convex (rather than concave, as shown in Figure
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8.2 Show that if an individual’s utility-of-wealth function is convex (rather than concave, as shown in Figure 8.1), he or she will prefer fair gambles to income certainty and may even be willing to accept somewhat unfair gambles. Do you believe this sort of risk-taking behavior is common? What factors might tend to limit its occurrence?
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Related Book For
Microeconomic Theory Basic Principles And Extensions
ISBN: 9780324270860
9th Edition
Authors: Walter Nicholson
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