Suppose that Professor Nash is planning to attend a 10 day academic conference. His utility function for the trip is U = T ², where T is the length of the conference in days. Professor Nash is concerned that he will be forced to leave the conference early due to an illness in his family. The probability that Professor Nash will have go home is 40 percent. Professor Nash can best be described as: A) A risk lover. B) A risk hater. C) Being indifferent to risk. D) A person who would not accept a fair gamble. E) As someone who hates to travel.

Question

Quizplus · Accepted Answer

Professor Nash's utility function is U = T^2, which is a convex function, indicating that he derives increasing marginal utility from attending the conference for more days. This suggests that he is a risk lover, as he prefers the uncertainty of potentially attending more days over the certainty of attending fewer days.

Suppose That Professor Nash Is Planning to Attend a 10