Jason is indifferent between 10 for sure and a lottery that

Reference no: EM13378846

Jason is indifferent between $10 for sure and a lottery that pays $100 with probability 0.09 and $0 with probability 0.91. He is also indifferent between $70 for sure and a lottery that pays $100 with probability 0.80 and $0 with probability 0.20. Jason is given a choice between lottery A or B:

Z = {$100, $70, $10, $0}

pA = (0.10, 0.20, 0.70, 0)

pB = ( 0, 0.40, 0.50, 0.10)

If Jason's preferences are complete, transitive, continuous and monotone, and satisfy the substitution axiom, then will he prefer lottery A or B? Show your work and comment on Jason's risk attitudes.

Reference no: EM13378846

Questions Cloud

Compute the opportunity cost in forgone tanks for each : compute the opportunity cost in forgone tanks for each additional truck producedtruck output 0 1

A riskadverse manager is considering two projects the first : a riskadverse manager is considering two projects. the first project involves expanding the market for hotdog the

Two clothing stores in lowland mall are approached by a : two clothing stores in lowland mall are approached by a supplier with two lines to offer say formal or casual. the

Elaine as senior partner can make a take-it-or-leave it : elaine as senior partner can make a take-it-or-leave it offer to her junior partner john to undertake a project and

Jason is indifferent between 10 for sure and a lottery that : jason is indifferent between 10 for sure and a lottery that pays 100 with probability 0.09 and 0 with probability 0.91.

The company iie inc is considering upgrading their : the company iie inc. is considering upgrading their distribution center dc and have received investment proposal from

Grow fertilizers company purchases a gravity settling tank : grow fertilizers company purchases a gravity settling tank of the 30000 purchase price. the company finances 30 of the

Derive the marginal rate of substitution mrs between x and : derive the marginal rate of substitution mrs between x and yuxyaxp1-ayp1puxylnxy uxyxaxalphaybetay

1 the primary reason for the creation of the federal : 1 the primary reason for the creation of the federal reserve system wasa the desire to reduce or eliminate bank

User Account

All Pages