A. Find the value for p that makes you indifferent between

Lottery 1 Win $1,000 with probability p

Win $0 with probability 1 - p

and

Lottery 2 Win $400 for sure

B. Now find the q that makes you indifferent between

Lottery 3 Win $400 with probability 0.50

Win $0 with probability 0.50

and

Lottery 4 Win $1,000 with probability q

Win $0 with probability 1 - q

C.According to your assessment in part a, U($400) = p. In part b, U($400) = 2q. Explain why this is the case.

D. To be consistent, your assessments should be such that p = 2q. Were your assessments consistent? Would you change them? Which assessment do you feel most confident about? Why?