Let option A be an asset with payoffs (1,0,0,0,0) and option B an asset with payoffs (0,0,1,0,0), where the first number represents payoff at t=1, the second number represents payoff at t=2, etc. Assume at t=1, you prefer A over B. Furthermore, let option C be an asset with payoffs (1,0,0,0,1) and option D an asset with payoffs (0,0,1,0,1). Assuming you have time preferences represented by the Discounted-Utility model...
Question 14 Select one:
a. At t=1, you prefer D over C.
b. At t=1, you prefer C over D.
c. At t=1, you are indifferent between C and D.
d. You do not have enough information to say what your preference is at t=1.