A risk averse expected utility maximiser owns a house worth y. There is a 50% chance that
Fantastic news! We've Found the answer you've been seeking!
Question:
A risk averse expected utility maximiser owns a house worth y. There is a 50% chance that the house will be damaged by a storm, incurring a loss of L.
suppose that the agent's utility of wealth is u(x) = ln x.
(iv) Derive the coefficients of absolute and relative risk aversion of the agent. Interpret the two measures
Posted Date: