Represented by the expected value of payoff function

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Reference no: EM131097771

There are three possible outcomes; in the outcome ai a decision-maker gains $ai, where a1<a2<a3. The decision-maker prefers a3 to a2 to a1 and she prefers the lottery (0.3,0,0.7) to (0.1,0.4,0.5) to (0.3,0.2,0.5) to (0.45,0,0.55). Is this information consistent with the decision-maker's preferences' being represented by the expected value of a payoff function? If so, find a payoff function consistent with the information. If not, show why not. Answer the same questions when, alternatively, the decision-maker prefers the lottery (0.4,0,0.6) to (0,0.5,0.5) to (0.3,0.2,0.5) to (0.45,0,0.55).

Reference no: EM131097771

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