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Suppose that a decision maker is an expected utility maximiser with an increasing and continuous Bernoulli utility function u() on amounts of money. Show that
Suppose that a decision maker is an expected utility maximiser with an increasing and continuous Bernoulli utility function u() on amounts of money. Show that the decision maker is risk averse if and only if C(F,u)xdF(x) for every gamble F() where C(F,u) represents the certainty equivalent for gamble F(). [20 mark
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