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A Decision Maker Who Is Considered to Be a Risk

Question 19

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A decision maker who is considered to be a risk taker is faced with this set of probabilities and payoffs
A decision maker who is considered to be a risk taker is faced with this set of probabilities and payoffs For the lottery p(80)+ (1 - p)(-50),this decision maker has assessed the following indifference probabilities Payoff Probability 50 .60 20 .35 10 .25 5 .22 0 .20 -10 .18 -25 .10 Rank the decision alternatives on the basis of expected value and on the basis of expected utility. For the lottery p(80)+ (1 - p)(-50),this decision maker has assessed the following indifference probabilities
Payoff Probability
50 .60
20 .35
10 .25
5 .22
0 .20
-10 .18
-25 .10
Rank the decision alternatives on the basis of expected value and on the basis of expected utility.

Correct Answer:

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EV(d1)= 12 EV(d2)= 10 ...

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