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
We’ve answered 319,194 questions. We can answer yours, too.Ask a question