Economics Problem dealing with Probability
I have an economics problem dealing with probability, the people here (econ majors) probably have more knowledge on these matters than I, hoping for some feedback. Apparently "maybe" and "need more info" are possible answers for these as well.
A) Would a risk-averse person accept a bet where he wins $550 with 10% probability, $175 with 30% probability and loses $150 with 60% probability?
B) What is the expected payoff of the above bet?
C) What is the expected utility of accepting the above bet if the initial wealth is $1050 and the utility function is U = W1/2?
D) Given the above utility function and initial wealth, would the person accept the bet?
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