Question
3. Suppose U(X)=15+X. a. Graph this utility function b. Suppose you have a binary lottery with a 40% chance of $0 and a 60% chance
3. Suppose U(X)=15+X.
a. Graph this utility function
b. Suppose you have a binary lottery with a 40% chance of $0 and a 60% chance of $100. Draw the probability tree of this lottery.
c. Show the lottery in Part B on your graph from Part A. You need to show: U(0), U(100), EV, U(EV), EU, U(CE) and the CE. Be sure to label everything clearly.
d. What can you say about the CE and EV for this lottery? Why?
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Hostile Money Currencies In Conflict
Authors: Paul Wilson
1st Edition
075099178X, 9780750991780
