Show that if an individuals utility-of-wealth function is convex then he or she will prefer fair gambles

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Show that if an individual’s utility-of-wealth function is convex then 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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Microeconomic Theory Basic Principles And Extensions

ISBN: 9781305505797

12th Edition

Authors: Walter Nicholson, Christopher M. Snyder

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