Sven is considering a fishing trip. If there is good weather, his utility gained from the trip will be worth $900. If the weather is bad, his utility from the trip will be worth -$300. There is a 60% chance of bad weather and a 40% chance of good weather. What is Sven's expected utility for the fishing trip?

Question

Quizplus · Accepted Answer

Expected utility = (probability of good weather x utility in good weather) + (probability of bad weather x utility in bad weather)
Expected utility = (0.4 x $900) + (0.6 x -$300)
Expected utility = $360 - $180
Expected utility = $180

Therefore, Sven's expected utility for the fishing trip is $180. Since this is a positive value, it is worth taking the fishing trip.

Sven Is Considering a Fishing Trip