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.

Quizplus · Accepted Answer

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