Essay
Suppose there are two jars. In Jar know that there are 10 white balls and either 5 or 20 black balls. In Jar 2 I know that there are 10 red balls and either 10 or 30 black balls. I receive if a white ball is drawn from jar 1 and if a red ball is drawn from jar 2 and 0 otherwise.
a. Suppose that I am risk-neutral. Using maxmin expected utility theory, do I draw from jar 1 or jar 2 and what is the value of my maxmin expected utility?
b. Now suppose I am risk-averse, with a utility function given by . Do I choose Jar 1 or Jar 2 ?
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