Two Plus Two Newer Archives  

Go Back   Two Plus Two Newer Archives > Other Topics > Student Life
FAQ Community Calendar Today's Posts Search

 
 
Thread Tools Display Modes
Prev Previous Post   Next Post Next
  #1  
Old 02-12-2007, 10:19 PM
LegendofLink LegendofLink is offline
Senior Member
 
Join Date: Apr 2006
Location: losing with AQ, losing to AQ
Posts: 1,067
Default 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?
Reply With Quote
 


Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT -4. The time now is 11:08 AM.


Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2026, vBulletin Solutions Inc.