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Three Decision Makers Have Assessed Payoffs for the Following Decision

Question 43

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Three decision makers have assessed payoffs for the following decision problem (payoff in dollars):
Three decision makers have assessed payoffs for the following decision problem (payoff in dollars): The indifference probabilities are as follows: a. Plot the utility function for money for each decision maker. b. Classify each decision maker as a risk avoider, a risk taker, or risk neutral. c. For the payoff of 40, what is the premium that the risk avoider will pay to avoid risk? What is the premium that the risk taker will pay to have the opportunity of the high payoff?
The indifference probabilities are as follows:
Three decision makers have assessed payoffs for the following decision problem (payoff in dollars): The indifference probabilities are as follows: a. Plot the utility function for money for each decision maker. b. Classify each decision maker as a risk avoider, a risk taker, or risk neutral. c. For the payoff of 40, what is the premium that the risk avoider will pay to avoid risk? What is the premium that the risk taker will pay to have the opportunity of the high payoff? a. Plot the utility function for money for each decision maker.
b. Classify each decision maker as a risk avoider, a risk taker, or risk neutral.
c. For the payoff of 40, what is the premium that the risk avoider will pay to avoid risk? What is the premium that the risk taker will pay to have the opportunity of the high payoff?

Correct Answer:

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a.
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b. A - Risk taker
B - Risk avoider...

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