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(Only for extra credit) Consider Freddy on a rainy Thursday afternoon after losing in his favorite video game. His friend Tommy comes over to cheer him up and offers him the following choice:
Lottery A: £10000 for sure (probability 100%)
To our surprise, in the ?rst case Freddy chooses A and in the second case Freddy chooses D. When you put these choices together can you conclude that Freddy is not maximizing his Expected Utility? If yes, why? If no, why not?
A risk-neutral agent's working life has two periods. In each period, the agent can provide high effort (at personal cost $2,000) or low effort (at zero personal cost). In a given p
factorsw determining demand
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