Is it true that for an expected utility maximizer to be a risk averter, his/her utility function
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Is it true that for an expected utility maximizer to be a risk averter, his/her utility function should have a negative second derivative? Let u(x) = x for x ∈ [0,1], and u(x) = 1/2 + 1/2x for x ≥ 1. Graph this function. Is an EU maximizer with this utility function a risk averter? (Advice: Look up the definition of concavity.)
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The concavity condition does not p...View the full answer
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