Suppose Adam's preference admits a subjective expected utility representation and his vNM utility function over money is
Fantastic news! We've Found the answer you've been seeking!
Question:
Suppose Adam's preference admits a subjective expected utility representation and his vNM utility function over money is u(w) = w. He faces uncertainty in terms of whether it will be rainy or sunny tomorrow. He is indifferent between the following two acts: (a) Winning 2 dollars if it is rainy, and losing 5 dollars if it is sunny; (b) Losing 4 dollars if it is rainy, and winning 2 dollars if it is sunny; What is Adam's subjective belief about tomorrow's weather (that is, chances that it will be rainy, and chances that it will be sunny)?
Posted Date: