Better Students Ask More Questions.
A person has an intial wealth of W = £144 (W denotes Wealth) and the following utility...
A person has an intial wealth of W = £144 (W denotes Wealth) and the following utility function, U(W) = W 0.5. There is the opportunity to make an investment that will yield a return of £42 or make a loss of £42, which with a probability of 1/2. By calculating this persons expected utility when the investment is made and when it is not made, determine whether this person should make the investment.
0 Answers | Be the first to answer
Related QuestionsSee all »
Join to answer this question
Join a community of thousands of dedicated teachers and students.