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(c) Assume that the following indifference probabilities are assigned. Profit $103,000 $54,000 $0 -$54,000 Indifference Probability (p) Risk Avoider Risk Taker 0.96 0.72 = 0.55
(c) Assume that the following indifference probabilities are assigned. Profit $103,000 $54,000 $0 -$54,000 Indifference Probability (p) Risk Avoider Risk Taker 0.96 0.72 = 0.55 Do the utilities reflect the behavior of a risk taker or a risk avoider? 0.28 (d) Use expected utility to make a recommended decision. (Assign a utility of 10 to the payoff of $153,000 and a utility of 0 to the payof EU(market the product) = EU(do not market the product) Since EU(market the product) is greater than 8 EU(do not market the product) the expected utilita
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