Stephan has the utility function U(w)= 3 ,where w is his wealth.Initially,Stephan has w = $100.Would Stephan pay $5 to take the following gamble: With probability 0.03 he wins $25; otherwise,he wins nothing.

Question

Stephan has the utility function U(w)= 3  ,where w is his wealth.Initially,Stephan has w = $100.Would Stephan pay $5 to take the following gamble: With probability 0.03 he wins $25; otherwise,he wins nothing.

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The Answer of Stephan has the utility function U(w)= 3  ,where w is his wealth.Initially,Stephan has w = $100.Would Stephan pay $5 to take the following gamble: With probability 0.03 he wins $25; otherwise,he wins nothing.

Stephan Has the Utility Function U(w)= 3 ,Where W