(Table: Choice with Uncertainty) Look at the table Choice with Uncertainty.Suppose the probability that the sitcom does not make it to television is 30%, that it makes it to television but is not the most viewed show in its time slot is 50%, and that it makes it to television and is the most viewed show in its time slot is 20%.Given this information, Norman, as a utility maximizer:
A)should keep his teaching job.
B)should quit his teaching job and go to Hollywood.
C)will be indifferent between leaving and staying, because his expected income is the same whether he stays a teacher or moves to Hollywood.
D)will be indifferent between leaving and staying, because his expected total utility is the same whether he stays a teacher or moves to Hollywood.

Question

(Table: Choice with Uncertainty) Look at the table Choice with Uncertainty.Suppose the probability that the sitcom does not make it to television is 30%, that it makes it to television but is not the most viewed show in its time slot is 50%, and that it makes it to television and is the most viewed show in its time slot is 20%.Given this information, Norman, as a utility maximizer:
A)should keep his teaching job. 
B)should quit his teaching job and go to Hollywood. 
C)will be indifferent between leaving and staying, because his expected income is the same whether he stays a teacher or moves to Hollywood. 
D)will be indifferent between leaving and staying, because his expected total utility is the same whether he stays a teacher or moves to Hollywood.

Quizplus · Accepted Answer

Since Norman is a utility maximizer, he will choose the option that gives him the highest expected utility. Given the information in the table, the expected utility of becoming a sitcom writer is:
Expected utility = (0.30)(0) + (0.50)(10) + (0.20)(20) = 9
This is higher than the expected utility of staying a teacher, which is expected to be about 7 (assuming a reasonable salary for a teacher and that Norman enjoys teaching). Therefore, Norman should quit his teaching job and try to become a sitcom writer.

(Table: Choice with Uncertainty) Look at the Table Choice with Uncertainty.Suppose