u(x) = 1/b - 1*(a + b + x) 1 - 1/6) = *
Posted: Mon Nov 15, 2021 5:06 pm
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wealth x = 13 and is
exposed to a gamble that yields +3 with probability 1=2 and 3 with
probability
1=2, what is the expected utility of this decision maker when she
is exposed to the
gamble?
(c) How much would the decision maker (for whom a = 1, b = 1=2, and
x = 13) at most
be willing to pay to an insurance company in order to avoid the
gamble specified
in the previous question (b)?
u(x) = 1/b - 1*(a + b + x) 1 - 1/6) = *