Anneke is considering a hiking vacation in the mountains. If the weather is good, she will gain utility valued at $3,000 from the trip. If the weather is bad, she will lose utility valued at $2,000. The weather has a 40% chance of being good and a 60% chance of being bad. What is Anneke's expected utility if she goes on the trip?

Question

Quizplus · Accepted Answer

The expected utility is calculated as the sum of the utilities under each scenario weighted by their probabilities: (0.4 * $3,000) + (0.6 * -$2,000) = $1,200 - $1,200 = $0.

Anneke Is Considering a Hiking Vacation in the Mountains