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5. Suppose the set of outcomes for gamble is given by A = ($10, $5, -$2). Let's say $5 - (0.7 . $10, 0.3 .
5. Suppose the set of outcomes for gamble is given by A = ($10, $5, -$2). Let's say $5 - (0.7 . $10, 0.3 . -$2) that is the agent is indifferent between a gamble with $5 as sure outcome and another gamble where with 0.7 probability one receives $10 and with 0.3 probability one receives -$2. a. Is the agent, risk-averse, risk lover or risk neutral? Why? b. Based on von Neumann Morgenstern axioms rank the following gambles for the agent: 1. (0.5 . $10, 0.2 . $5, 0.3 . -$2) ii. (0.4 . $10, 0.5 . $5, 0.1 . -$2) iii. (0.1 . $10, 0.6 . $5, 0.3 . -$2)
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