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Wilma is not risk averse. She is offered a chance to pay $10 for a lottery ticket that will give her a prize of $100
Wilma is not risk averse. She is offered a chance to pay $10 for a lottery ticket that will give her a prize of $100 with probability 0.05, a prize of $50 with probability 0.1, and no prize with probability 0.85. If she understands the odds and makes no mistakes in calculation, will she buy the lottery ticket? Explain.
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