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According to Expected Utility Theory (with a concave utility function u(.)),ifoneis indifferent between a sure wealth level wy and a bet of (wx,p;w,1p), please derive
According to Expected Utility Theory (with a concave utility function u(.)),ifoneis indifferent between a sure wealth level wy and a bet of (wx,p;w,1p), please derive that one should prefer the bet (wx,(1r)p;wy,rp;wry,1p) to the sure wealth level wy. Assume that u(w)=1 and u(wx)=0, where w is current wealth level and w>x>y>0. According to Expected Utility Theory (with a concave utility function u(.)),ifoneis indifferent between a sure wealth level wy and a bet of (wx,p;w,1p), please derive that one should prefer the bet (wx,(1r)p;wy,rp;wry,1p) to the sure wealth level wy. Assume that u(w)=1 and u(wx)=0, where w is current wealth level and w>x>y>0
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