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An agent has certain wealth W 100 and a utility function U[W] = W). The agent can purchase lottery tickets for a price p
Posted: Tue Nov 23, 2021 8:59 am
by answerhappygod
- An Agent Has Certain Wealth W 100 And A Utility Function U W W The Agent Can Purchase Lottery Tickets For A Price P 1 (80.29 KiB) Viewed 81 times
An agent has certain wealth W 100 and a utility function U[W] = W). The agent can purchase lottery tickets for a price p · 1 per ticket. Each lottery ticket sold will pay O with probability 0.9 or will pay 11 with probability 0.1. (a) Should this individual buy one lottery ticket? Why or why not? (b) Irrespective of your answer to part (a), suppose the individual does purchase one lottery ticket. Should she also purchase a second ticket? Why or why not. Hints = (a) No gamble U(W) w P)] +pl(W. + Lose – P)] 10. Gamble E
= pw (Wo + Win – 10.0037 =