Simply assume that the probability-weighting function is (p) = p for any p [0, 1].

Suppcxse Alex's utility function is u ($:r) = x.G. Assume her initial wealth is 0. prospect ($16, 0.5; $4, 0.5). Consider a 2. 3. 4. 5. 6. What is the expected value of the prospect? What is the expected utility of the prospect? What is Alex's cfrtainty equivalent of the prospect? Is Alex risk-seeking, risk-averse, or risk-neutral? Explain. Draw a graph of Alex's utility function. For the given prospect ($16, 0.5; $4, 0.5), mark the certainty equivalent with CE, expected value with Eli, and expected utility with EU. Now consider the prospect ($16, p; $4,1 p). If Alex's utility from the pruspect equals 2 , what is p?