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Pete's expected utility function is pc1/21 (1 p) c1/22, where p is the probability that he consumes c1 and 1 p is the probability that he consumes c2.Pete is offered a choice between getting a sure payment of $Z or a lottery in which he receives $1,600 with probability .80 or $14,400 with probability .20.Pete will choose the sure payment if
A) Z 3,136 and the lottery if Z 3,136.
B) Z 8,768 and the lottery if Z 8,768.
C) Z 14,400 and the lottery if Z 14,400.
D) Z 2,368 and the lottery if Z 2,368.
E) Z 4,160 and the lottery if Z 4,160.
On Apr 27, 2024