Uncertainy question..?
There are two events, 1 and 2. The probability of the event 1 is p and the probability of event 2 is 1-p. Sally is an expected utility maximizer with a utility function is p*u(c1) + (1-p)*u(c2), where for any number x, u(x) = 2x if x<1000 and u(x) = 1000 + x if x is greater than or equal to 1000.
A. Sally is risk lover
B. Sally will be a risk averter if she is poor but will be a risk lover is she is rich
C. Sally will be a risk lover if she is poor but a risk averter if she is rich
D. If there is no chnace of her wealth exceeding $1000, then she will take any bet that has positive expected net winnings
E. None of the above
Which one should i choose?
thx
Answer:
E. None
Then take 2 aspirins
just a guess by the way
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A. Sally is risk lover
B. Sally will be a risk averter if she is poor but will be a risk lover is she is rich
C. Sally will be a risk lover if she is poor but a risk averter if she is rich
D. If there is no chnace of her wealth exceeding $1000, then she will take any bet that has positive expected net winnings
E. None of the above
Which one should i choose?
thx
Answer:
E. None
Then take 2 aspirins
just a guess by the way
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