Question

3 Lotteries For each set of lotteries below, show which will be preferred by a risk neutral expected utility maximizer. a. Lottery A: 65% chance at $50, 35% chance at $20 Lottery B: 25% chance at $80, 75% chance at $15 b. Lottery C: 10% chance at $100, 40% chance at $40, 30% chance at $20, 20% chance at $0 Lottery D: 30% chance at $75, 25% chance at $30, 20% chance at $5, 25% chance at $0 c. Lottery E: 25% chance at $100, 15% chance at $60, 30% chance at $20, 30% chance at $0 Lottery F: 40% chance at $80, 25% chance at 30, 5% chance at $10, 30% chance at $0

          3 Lotteries
For each set of lotteries below, show which will be preferred by a risk neutral expected utility
maximizer.
a.
Lottery A: 65% chance at $50, 35% chance at $20
Lottery B: 25% chance at $80, 75% chance at $15
b.
Lottery C: 10% chance at $100, 40% chance at $40, 30% chance at $20, 20% chance at
$0
Lottery D: 30% chance at $75, 25% chance at $30, 20% chance at $5, 25% chance at $0
c.
Lottery E: 25% chance at $100, 15% chance at $60, 30% chance at $20, 30% chance at $0
Lottery F: 40% chance at $80, 25% chance at 30, 5% chance at $10, 30% chance at $0

3 Lotteries
For each set of lotteries below, show which will be preferred by a risk neutral expected utility
maximizer.
a.
Lottery A: 65% chance at $50, 35% chance at $20
Lottery B: 25% chance at $80, 75% chance at $15
b.
Lottery C: 10% chance at $100, 40% chance at $40, 30% chance at $20, 20% chance at
0
Lottery D: 30% chance at $75, 25% chance at $30, 20% chance at $5, 25% chance at $0
c.
Lottery E: 25% chance at $100, 15% chance at $60, 30% chance at $20, 30% chance at $0
Lottery F: 40% chance at $80, 25% chance at 30, 5% chance at $10, 30% chance at $0

Added by Jessica G.

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