Econ HW - Expected Value

[ItalianFX]

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Quadratic equation. It looks like it would be a pain to factor it, but you might be able to (the second solution you get with the quadratic equation is negative and obviously doesn't apply here).

For the coin question: To calculate EV, you need to multiply two things together. 1) probability of an event happening. 2) utility when that event happens (some will be positive, some negative, in this coin problem)

Do this for all the possible events in the problem and then add the products together.

The coin problem should be very simple.

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Yeah I thought so.

(.5)(.5)(20)+(.5)(.5)(9)+(.5)(.5)(-7)+(.5)(.5)(-16) = 1.5