Suppose that experimental subjects are presented with two urns. Urn A contains 100 red and black balls, but in an unknown ratio. Urn B has exactly 50 red and 50 black balls. Each subject must choose from different combinations of urn and selected ball color. The subject will receive a $100 prize if that color is drawn and $0 if the other color is drawn. Such choices are to be made for each of the following four cases:

i. A red draw from Urn A or a black draw from Urn A

ii. A red draw from Urn B or a black draw from Urn B iii. A red draw from Urn A or a red draw from Urn B

iv. A black draw from Urn A or a black draw from Urn B

Typically, subjects will be indifferent between the options in (i) and (ii), while clearly preferring the draws from Urn B in (iii) and (iv). Explain both the problem this set of preferences poses for the principle of maximizing expected utility and how the maximin criterion for expected utility (MMEU) could be used to make sense of such preferences.