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Consider the following two lotteries over the outcome vector (10, 9, 0) given by probability vectors p1 = (0, 1, 0) and p2 = (0.33,
Consider the following two lotteries over the outcome vector (10, 9, 0) given by probability vectors p1 = (0, 1, 0) and p2 = (0.33, 0.66, 0.01). The investor prefers p2 over p1, i.e. p2 > p1. Consider two alternative lotteries over the same outcome vector given by probabilities q1 = (0.33, 0, 0.67) and q2 = (0, 0.34, 0.66). Suppose the independence axiom holds. Which of the following statements is correct?
a) q1 > q2 b) the investor is indifferent between q1 and q2 c) there is not enough information to give a clear answer d) q2 > q1
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