In Problem 9, Billy has a von Neumann-Morgenstern utility function U(c) . If Billy is not injured this season, he will receive an income of 4 million dollars. If he is injured, his income will be only 10,000 dollars. The probability that he will be injured is .1 and the probability that he will not be injured is .9. His expected utility is
A) 3,620 dollars.
B) 1,810 dollars.
C) between 3 and 4 million dollars.
D) 100,000 dollars.
E) 7,240 dollars.

Question

In Problem 9, Billy has a von Neumann-Morgenstern utility function U(c)  . If Billy is not injured this season, he will receive an income of 4 million dollars. If he is injured, his income will be only 10,000 dollars. The probability that he will be injured is .1 and the probability that he will not be injured is .9. His expected utility is
A) 3,620 dollars. 
B) 1,810 dollars. 
C) between 3 and 4 million dollars. 
D) 100,000 dollars. 
E) 7,240 dollars.

Quizplus · Accepted Answer

The Answer of In Problem 9, Billy has a von Neumann-Morgenstern utility function U(c)  . If Billy is not injured this season, he will receive an income of 4 million dollars. If he is injured, his income will be only 10,000 dollars. The probability that he will be injured is .1 and the probability that he will not be injured is .9. His expected utility is
A) 3,620 dollars. 
B) 1,810 dollars. 
C) between 3 and 4 million dollars. 
D) 100,000 dollars. 
E) 7,240 dollars.

In Problem 9, Billy Has a Von Neumann-Morgenstern Utility Function