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Question 8 aty Assume, Tane's utility function is: U(W) - W^0.5 (square root of W) and he operates under the tenets of expected utility theory.
Question 8 aty Assume, Tane's utility function is: U(W) - W^0.5 (square root of W) and he operates under the tenets of expected utility theory. He is considering taking a job with a start-up company that will pay a base salary of $30,000 but offers the potential of a $70,000 bonus at the end of the year with a 0.5 probability. This means that at the end of the year with 0.5 probability he will get $30000 and with 0.5 probability he will get $100000. Tane is not comfortable with this probabilistic salary scheme. He would prefer to accept a job that pays a certain fixed salary. Which of the following statements is CORRECT? O Tane will accept any job as long as the job comes with a certain payment of at least $40,000 (approx.). O Tane will accept any job as long as the job comes with a certain payment of at least $50,000 (approx.). O Tane will not accept any job with a certain payment of less than $80,000 (approx.). O Tane will accept any job as long as the job comes with a certain payment of at least $60,000 (approx.]
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