Question
Managing risk consider a mix [0, 1] of a random payoff X and a fixed amount c. The payoff of a mix is X =
Managing risk
consider a mix [0, 1] of a random payoff X and a fixed amount c. The payoff of a mix is X = (1 )X + c. (1) Let f denote the probability density function of X. 1. (10 points) Consider a decision maker with u(z) = 2 z, c = 0.42, X uniform on [0, 1]. What is the optimal ?
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Microeconomics An Intuitive Approach with Calculus
Authors: Thomas Nechyba
1st edition
538453257, 978-0538453257
