Pattie-lynns utility function, Applied Statistics

Pattie-Lynn's utility function for total assets is,

1378_Pattie-Lynns utility function.png

in which A represents total assets in thousands of dollars.

(a) Graph Pattie-Lynn's utility function. How would you classify her attitude toward risk?

(b) If Patty-Lynn's total assets are currently $10,000, should a bet in which she will win $10,000 with probability 0.6 and lose $10,000 with probability 0.4 appear favorable?

(c) If Patty-Lynn's total assets are currently $90,000, should the bet given in (b) appear favorable?

(d) Compare your answers to (b) and (c) . Does Patty-Lynn's betting behavior seem reasonable to you? How could you intuitively explain such behavior?

Using a sequence of simple lotteries (two or three will suffice), assess your own utility function over the range [-$10,000, +$100,000].  Show the lotteries you use, and plot the results.

Faced with a simple lottery with a 0.75 probability of winning $1000 and a 0.25 probability of losing $4000, what is your expected utility for the lottery?

Posted Date: 2/22/2013 1:21:11 AM | Location : United States







Related Discussions:- Pattie-lynns utility function, Assignment Help, Ask Question on Pattie-lynns utility function, Get Answer, Expert's Help, Pattie-lynns utility function Discussions

Write discussion on Pattie-lynns utility function
Your posts are moderated
Related Questions
These techniques are applied when the rows and the columns of the data table represent the same units and when the measure is a disiance or a similarity. The goal of the analysis i

A marketing research firm was engaged by an automobile manufacturer to conduct a pilot study to examine the feasibility of using logistic regression for ascertaining the likelihood

how do you find if two way or one way

(1) What values can the response variable Y take in logistic regression, and hence what statistical distribution does Y follow? The response variable can take the value of either

A new weight-watching company, Weight Reducers International, advertises that those who join will lose, on the average, 10 pounds the first two weeks with a standard deviation of 2

1. Recognize and explain the opportunities for statistical learning. 2. Describe how the use of statistics supports student learning. 3. Recognize appropriate data displays a

#quesgraphical representation of data

a 100 squash balls are bounce from height of 100 inches with average height 30 inch with standard deviation 3/4 inch. a ball is fast if bounce above 32 inch. what is chance of gett

who invented the chi square test and why? what is central chi square and non central chi square test? what is distribution free statistics? what are the conditions when the chi squ

You have an assembly line which produces 1L bottles of seltzer with a standard deviation of 0.05L. • Assuming the distribution of volume is normal, what is the chance any single