00:01
So here we are talking about risk, and for the first question we need the expected value of w.
00:05
So the expected value would be, so you have a 25 % chance of getting 0, you have a 25 % chance of getting 50, you have a 25 % chance of getting 150, and you have a 25 % chance of getting 200.
00:31
And this gives you an expected value of 100.
00:35
Now for b, what we're going to need is the expected utility of w, right? so here to get expected utility, we need to say, well, you have a 25 % chance of plugging zero into your utility function.
00:48
You have a 25 % chance of plugging 50 into your utility function.
00:54
You have a 25 % chance of plugging 150 into your utility function.
00:59
And you have a 25 % chance of plugging 200 into your utility function.
01:03
That gives you expected utility of 16 ,250, right? there's my expected utility...