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Suppose an individual is offered a lottery. A single die is rolled and if she rolls a 1 or 2, she wins $90. If she
Suppose an individual is offered a lottery. A single die is rolled and if she rolls a 1 or 2, she wins $90. If she rolls a 3,4,5, or 6, she loses $42. She is also just indifferent between accepting the lottery and walking away from it. a. What is the expected value of this lottery? b. Can we tell whether the individual is risk averse, risk neutral, or risk loving from this information? Explain your answer.
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