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Assume you are faced with the following decision tree of either investing or not investing. If you invest, you have a 0.2 probability of gaining
Assume you are faced with the following decision tree of either investing or not investing. If you invest, you have a 0.2 probability of gaining $100,000 and a 0.8 probability of losing $40,000.
If you are risk neutral, should you choose 'Don't invest' or 'Invest'?
A financial advisor can tell you whether your investment would be either a success or a failure. What is the largest fee you would be willing to pay for this information? (You are still risk neutral.)
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