If the payoff from outcome A is twice the payoff from outcome B, then the ratio of these utilities will be
A) 2 to 1.
B) less than 2 to 1.
C) more than 2 to 1.
D) unknown without further information.

Question

If the payoff from outcome A is twice the payoff from outcome B, then the ratio of these utilities will be
A) ​2 to 1.
B) ​less than 2 to 1.
C) ​more than 2 to 1.
D) ​unknown without further information.

Quizplus · Accepted Answer

The ratio of utilities depends on the utility function, which may not be linear. Therefore, without knowing the specific utility function, the ratio of utilities cannot be determined solely based on the payoff amounts.

If the Payoff from Outcome a Is Twice the Payoff