Thank you for your explain.

_ Consider the following lottery. A fair coin is tossed. If head comes up. you get 2. After tail a second coin is tossed. If head comes up now, you get 4. Suppose first that with the third toss. you get 8 after head and 0 after tail. Initial wealth is 10. (a) What is the expected wealth under this multistage lottery? How much would a riskneutral decision maker pay at most to par ticipate in this lottery? (b) Lea has utility over wealth levels u(z) = . What is her expected utility when she participates in the lottery? What is the certainty equivalent of this lottery? What is her willingness to pay to participate in this lottery? Compare to a). (c) Now suppose that the lottery never stops, i.e. gives 2'n if head comes up in toss number n, and continues to time 71 +1 other wise. How much is a risk neutral decision maker willing to pay to participate in this lottery