Sanjay won a poker game against his friends. Now he has to choose between $600 (the winnings) and the chance to play a new game. In this new game, Sanjay has a 50% chance of winning nothing and a 50% chance of winning $1000.

The following graph presents the utility function of Sanjay with respect to money:

Q1. By how much money would his winnings need to increase or decrease so that Sanjay is indifferent between the $600 and the new game?

At a different table, Juan wins $800 in a blackjack game. Similarly, he has to choose between $800 or the chance to win a new game. In this game, Juan has a 45% chance of winning nothing and a 55% chance of winning $1000.

The following graph presents the utility function of Juan with respect to money:

Q2. By how much money would his winnings need to increase or decrease so that Juan is indifferent between the $800 and the new game?

U(w) U(w) U (1,000) - 1 - - - - - 1 - U(600) U (500) - - - - - - - U (230) 0 230 500 600 1,000 w U(w) U(w) U (1,000) U (800) U(550) 0 550 800 1,000 W