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A decision maker faces a risky gamble in which she may obtain 1 of 5 outcomes. Label the outcomes A, B, C, D and E. A is most preferred, E is least preferred.What are U(A), U(B), U(C), U(D) and U(E)?

05 / 03 / 2018 Assignment

This paper circulates around the core theme of A decision maker faces a risky gamble in which she may obtain 1 of 5 outcomes. Label the outcomes A, B, C, D and E. A is most preferred, E is least preferred.What are U(A), U(B), U(C), U(D) and U(E)? together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 45. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.

Utility functions need not relate to dollar values. Here’s a
problem in which we know little about 5 abstract outcomes. What is
important however is that a person who does know what A to E represent
should be able to compare the outcomes using the lottery procedures we
have studied.
A decision maker faces a risky gamble in which she may obtain 1 of 5 outcomes. Label the outcomes A, B, C, D and E.
A is most preferred, E is least preferred. She has made the following 3 assessments:

She’s
is indifferent between having C for sure or a lottery in which she wins
A with probability of 0.5 or E with probability 0.5.

She is indifferent between having B for sure or a lottery in which she wins A with probability 0.4 or C with probability 0.6.

She is indifferent between these 2 lotteries:
o 50% chance at B and 50% chance at D

o 50% chance at A and 50% chance at E

What are U(A), U(B), U(C), U(D) and U(E)?


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