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The decision maker ranks lotteries according to the utility function
(i) State the independence assumption. Does this decision maker satisfy it?
(ii) Is this decision maker risk averse? Does she satisfy decreasing risk aversion?
(iii) The decision maker has wealth w > 500 and is just indi?erent between accepting and rejecting a lottery that gives her an equal chance of winning 1000 and losing 500. What is the wealth of the decision maker?
what does it mean by moving average?
Each question, by default, should be solved INDIVIDUALLY, unless marked as \collaborative". Questions marked as \collaborative" implies that for those questions you are encourage
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For the following questions we are interested in a comparison of the 16 years education vs. > 16 years. (Recall we did the analysis on the log scale, so these are actual means on t
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