Question
Jill is risk averse and her friend Helen is risk neutral. They have the same amount of money in their pocket. Jill also has a
Jill is risk averse and her friend Helen is risk neutral. They have the same amount of money in their pocket.
Jill also has a lottery ticket that would pay 100 with a probability of 10%.
Which, of the following statements, is true?
Given their attitude towards risk, the price at which Jill is willing to sell the ticket is higher than the price that Helen would be willing to pay for it. Thus, a mutually beneficial trade is not possible. | |
Given their attitude towards risk, the price at which JILL is willing to sell the ticket is lower than the price that Helen would be willing to pay for it. Thus, a mutually beneficial trade is possible. | |
Given their attitude towards risk, the price at which Jill is willing to sell the ticket is equal to the price that Helen would be willing to pay for it. Thus, a mutually beneficial trade is not possible |
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