Question
Jake is a computer science major, but he's far more interested in playing video games. As graduation approaches, Jake is contemplating whether he should be
Jake is a computer science major, but he's far more interested in playing video games. As graduation approaches, Jake is contemplating whether he should be a programmer, or a pro-gamer. If he becomes a programmer, with probability 0.5 he can earn $160,000/year and with probability 0.5 he can earn $90,000/year. If he becomes a professional gamer, with probability 0.1 he is very successful and makes $360,000/year, with probability 0.8 he makes $40,000/year, and with probability 0.1 he keeps losing and only makes $10,000/year.
Jake's utility function for wealth isif he is a programmer, andif he is a gamer.
Question: What is Jake's expected utility if he becomes a programmer?
Jake is a computer science major, but he's far more interested in playing video games. As graduation approaches, Jake is contemplating whether he should be a programmer, or a pro-gamer. If he becomes a programmer, with probability 0.5 he can earn $160,000/year and with probability 0.5 he can earn $90,000/year. If he becomes a professional gamer, with probability 0.1 he is very successful and makes $360,000/year, with probability 0.8 he makes $40,000/year, and with probability 0.1 he keeps losing and only makes $10,000/year. Jake's utility function for wealth is U programmer (w)= w if he is a programmer, and U gamer (w)=2 w if he is a gamer.
What is Jake's expected utility if he becomes a programmer?
Jake is a computer science major, but he's far more interested in playing video games. As graduation approaches, Jake is contemplating whether he should be a programmer, or a pro-gamer. If he becomes a programmer, with probability 0.5 he can earn $160,000/year and with probability 0.5 he can earn $90,000/year. If he becomes a professional gamer, with probability 0.1 he is very successful and makes $360,000/year, with probability 0.8 he makes $40,000/year, and with probability 0.1 he keeps losing and only makes $10,000/year. Jake's utility function for wealth is U programmer (w)= w if he is a programmer, and U gamer (w)=2 w if he is a gamer.
What is Jake's expected utility if he becomes a programmer?
(Continue) What is Jake's expected utility if he becomes a pro-gamer?
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Microeconomics and Behavior
Authors: Robert Frank
9th edition
9780077723750, 78021693, 77723759, 978-0078021695
