Question 2:

Suppose that you face the following options:

a)Which one of these (Ia and Ib), would you choose?

Ia) $1 million for sure

Ib) An 89% chance of $1 million and a 10% chance of $5 million

b)Which one of these (IIa and IIb), would you choose?

IIa) An 11% chance of $1 million

IIb) A 10% chance of $5 million

c)Is your response to part a and part b consistent with the Expected Utility Theory? (1 point)

d)Why or why not? Explain your answer (1 point)