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1. What are the five Axioms of Choice under Uncertainty? Explain. 2. Given utility of wealth, U(w) = ln W, and the following gamble: 70%
1. What are the five Axioms of Choice under Uncertainty? Explain.
2. Given utility of wealth, U(w) = ln W, and the following gamble: 70% chance of a $5 gain and a 30% chance of a $30 gain. a. Compute the expected wealth, E (W), and U[E(W)]. b. Compute the expected utility of wealth provided by the gamble, E[U(w)]. c. Plot your result on a utility of wealth function graph (U(w) and W graph)
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