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RISK: Imagine Jamie has the utility function U(W) = ( W)/2 . Jamie has $100. Jamie and her roommate choose who pays their internet bill
RISK:
Imagine Jamie has the utility function U(W) = ( W)/2 . Jamie has $100. Jamie and her roommate choose who pays their internet bill each month with a coin-flip. The internet costs $64.
- What is the expected value of Jamie's cash after the internet bill is paid?
- What is Jamie's expected utility?
- Is Jamie risk averse, risk neutral, or risk seeking? Please explain.
- What risk premium would Jamie pay to avoid bearing the risk of the coin flip to decide who pays for internet?
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Experimental Econophysics Properties And Mechanisms Of Laboratory Markets
Authors: Ji Ping Huang
1st Edition
3662442345, 9783662442340
