Question
Someone has a Power Utility function with risk aversion parameter 0.78, and faces a risky lottery that pays $4, $5 or $16. The probabiliities of
Someone has a Power Utility function with risk aversion parameter 0.78, and faces a risky lottery that pays $4, $5 or $16. The probabiliities of the first two outcomes are 0.22 and 0.60. What is the Certainty Equivalent of this lottery to this person?
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Econometric Analysis Of Cross Section And Panel Data
Authors: Jeffrey M Wooldridge, J M Wooldridge
2nd Edition
0262232588, 9780262232586
