Question
Consider the following utility functions for wealth w: (i) u(w) = 3w, (ii) u(w) = w 1/3 , (iii) u(w) = w + sqrt(w), (iv)
Consider the following utility functions for wealth w: (i) u(w) = 3w, (ii) u(w) = w1/3, (iii) u(w) = w + sqrt(w), (iv) u(w) = w*sqrt(w). Which of these is most risk-averse (has the highest Arrow-Pratt coefficient of absolute risk aversion) at w = 1?
A) (i)
B) (ii)
C) (iii)
D) (iv)
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
