Question
choice under uncertainty Ben was infected to serious virus and if he doesn't take pills, he would die. There are two possible scenarios. Scenario 1:
choice under uncertainty
Ben was infected to serious virus and if he doesn't take pills, he would die. There are two possible scenarios.
Scenario 1: Ben can afford two very effective pills in his country:
Pill A: If Ben takes this pill,, Ben has 100% chance of living another 12 years.
Pill B: If Ben takes this pill, Ben has 89% chance of living another 12 years, 10% chance of living another 18 years, or 1% chance of heart attack, because of side-effect.
Scenario 2: Ben can afford two less effective pills in his country(different country from Scenario 1):
Pill C: If Ben takes this pill, Ben has 11% chance of living another 12 years and 89% chance of heart attack because of side-effect.
Pill D: If Ben takes this pill, Ben has 10% chance of living another 18 years and 90% chance of heart attack because of side-effect.
Suppose Ben has a complete, transitive preference relation over lotteries and he isn't indifferent between any of the four pills.
1)Is Ben's behavior constant with expected utility maximization?
2)Does Ben's preferences over lotteries satisfy independence?
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