Question
Hannah is considering playing the following lottery: with probability 0.86, Hannah will receive $8,100 and $661 with the complement probability. Hannah has also the choice
Hannah is considering playing the following lottery: with probability 0.86, Hannah will receive $8,100 and $661 with the complement probability. Hannah has also the choice of receiving $5,659 with 100% probability. Her utility function is: U = ln ( w ) where w is the wealth. Suppose that Hannah starts with 0 wealth.
Will Hannah play the lottery? (Answer 1 if yes, 0 if No)
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Financial Markets And Institutions
Authors: Anthony Saunders, Marcia Cornett
4th Edition
0077262379, 978-0077262372
