Question
Suppose that the outcome space contains three outcomes (1,2,3). Consider the following four lotteries: A B ==== C = (0.3, 0.7,0) (0,0.8,0.2) (0, 0.5,0.5)
Suppose that the outcome space contains three outcomes (1,2,3). Consider the following four lotteries: A B ==== C = (0.3, 0.7,0) (0,0.8,0.2) (0, 0.5,0.5) D = (0.6, x,y) Assume that a decision maker is indifferent between A and B, and is indifferent between C and D. Suppose the decision maker's preferences over lotteries satisfy the Independence Axiom, find out x,y. (Hint: You can use graph to get intuition.)
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Get StartedRecommended Textbook for
Statistics For Engineers And Scientists
Authors: William Navidi
3rd Edition
73376345, 978-0077417581, 77417585, 73376337, 978-0073376332
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