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3. Olivia is the risk-averse owner of a football team. She is deciding which player to sign. Knight will yield a known value of 15.
3. Olivia is the risk-averse owner of a football team. She is deciding which player to sign. Knight will yield a known value of 15. Unseld will yield an uncertain value equal to 0 with probability 1/2 and 30 with probability 1/2. (i) Which player will Olivia select? (ii) Now suppose there is a veteran player, Verlander, with a known value v E (0, 30). Olivia will select Knight or Unseld first. She then has the option to replace him with Verlander. Assume that her utility function satisfies u (0) = 0, u(15) = 15, and u (30) = 24. Will Olivia select Knight or Unseld first
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