1. The following describes a decision-maker’s utility function: Answer the following questions: -3000 (a) What is the ut

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answerhappygod
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1. The following describes a decision-maker’s utility function: Answer the following questions: -3000 (a) What is the ut

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1. The following describes a decision-maker’s utility function:
Answer the following questions:
-3000
(a) What is the utility of a gamble in which the decision-maker
would win $10,000 or lose $3,000 with probabilities of 0.5?
(b) What amount would the decision-maker accept for certain, for
indifference between the two choices? (You can use interpolation to
estimate)
(c) What is the gamble’s expected monetary value?
(d) What risk premium is being paid?
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