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The manager's utility function for profit is U ( ) = 10 ln( ) , where is the dollar amount of profit. The manager is
The manager's utility function for profit is U() = 10 ln(), where is the dollar amount of profit. The manager is considering a risky decision with the four possible profit outcomes shown below. The manager makes the following subjective assessments about the probability of each profit outcome:
Probability | Profit outcome ($) |
0.05 | $5,000 |
0.10 | $10,000 |
0.35 | $15,000 |
0.20 | $20,000 |
What is the expected utility of profit?
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