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Suppose your utility is equal to your income squared : U = I^2. Your utility from the sure amount of $500 is . Your expected
Suppose your utility is equal to your income squared: U = I^2.
Your utility from the sure amount of $500 is .
Your expected utility of the bet, when there is a 50% chance of getting $1,000 and a 50% chance of getting nothing is .
Would you take the bet?
This means you are (risk averse, risk neutral, risk loving).
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