Preferences reveal about asset bubbles and crashes

Reference no: EM13696718

An individual has the following preferences over lotteries: L2 > L1, where L1 = (-50, 1) (i.e. lose with 50 with certainty), and L2 = (0, 5; -100, 5). What insight do these preferences reveal about asset bubbles and crashes (such as a housing price collapse)?

Reference no: EM13696718

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