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Author Question: The above figure shows Bob's utility function. He currently has $100 of wealth, but there is a 50% ... (Read 185 times)

appyboo

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on: Mar 14, 2021

Question 1

What type of risk behavior does the person exhibit who is willing to pay $5 for the chance to bet $60 on a game where 20% of the time the bet returns $100, and 80% of the time returns $50? Explain.

Question 2

 

The above figure shows Bob's utility function. He currently has $100 of wealth, but there is a 50% chance that it could all be stolen. The midpoint of the chord that runs from zero and intersects the utility function where wealth is 100, represents Bob's
◦ risk premium.
◦ expected utility of receiving $50 with certainty.
◦ expected utility of receiving $0 50% of the time and $100 50% of the time.
◦ risk neutrality.
Managerial Economics and Strategy ¦ Perloff, Brander ¦ 3rd Edition
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Marked as best answer by appyboo on Mar 14, 2021

kusterl

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Reply #1 on: Mar 14, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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appyboo

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Reply 2 on: Mar 14, 2021
Great answer, keep it coming :)

cassie_ragen

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Reply 3 on: Yesterday
Gracias!

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