Question
Using the following decision problem (with payouts in utility), and using the risk function r ( p ) = p 2 show that REU violates
Using the following decision problem (with payouts in utility), and using the risk function r(p) = p2 show that REU violates the Sure-thing Principle:
0.4 | 0.4 | 0.2 | |
A | 2 | 6 | 0 |
B | 3 | 3 | 0 |
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International Economics Theory and Policy
Authors: Paul R. Krugman, Maurice Obstfeld, Marc Melitz
11th Edition
134519574, 9780134521046 , 978-0134519579
