Mathematics, 08.03.2021 19:10, arianaw6735
Assume the utility or the degree of desirability of $1 million is 100 and $0 is 0. It can be generally assumed that utility of money increases with the amount of money, and thus the utility of $500,000 is less than 100. (1) You are given 2 choices: (a) getting $500,000 tax-free for sure, and (b)taking a chance on a gamble that has a probability p of getting $1 million tax-free and probability 1-p of getting nothing. Clearly, if probability p is 100% in the gamble, as a rational and sane person, you will choose the gamble because you will have a 100% chance of getting $1 million; on the other hand, if p is 0%, you will choose $500,000 for sure. Now, by gradually reducing the probability p of getting $1 million in the gamble from 100% towards 0, find the probability p* for you will feel choice (b) has about the same degree of attractiveness or desirability as (a) to you.
Required:
Use p* to compute your utility of $500,000. (2) Repeat (1) by changing choice (a) to getting $200,000 tax-free for sure.
Answers: 2
Mathematics, 21.06.2019 15:00, voldermort9695
With these: 18/36 = 1/? missing number change 1 5/8 to improper fraction. change 19/5 to a mixed number.
Answers: 1
Mathematics, 21.06.2019 17:10, Andrewecolt1993
Which is a graph of a proportional relationship?
Answers: 1
Assume the utility or the degree of desirability of $1 million is 100 and $0 is 0. It can be general...
Mathematics, 26.06.2019 01:30
History, 26.06.2019 01:30
Mathematics, 26.06.2019 01:30
Mathematics, 26.06.2019 01:30