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You are facing a chance for a gain of $20,000. You do not know the exact probability. Consider the three pairs of outcomes: A: The
You are facing a chance for a gain of $20,000. You do not know the exact probability. Consider the three pairs of outcomes:
A: The probability is either 1% or 2%
B: The probability is either 41% or 42%
C: The probability is either 99% or 100%
Are the three differences, A, B, and C, equally significant to a decision-maker? Could you order them by their impact on preferences?
A: The probability is either 1% or 2%
B: The probability is either 41% or 42%
C: The probability is either 99% or 100%
Are the three differences, A, B, and C, equally significant to a decision-maker? Could you order them by their impact on preferences?
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Microeconomics
Authors: Robert Pindyck, Daniel Rubinfeld
8th edition
978-0132870436, 132870436, 013285712X, 978-0133371178, 133371174, 978-0132857123
