A risk-averse expected-utility maximizer

Assignment Help Microeconomics

Reference no: EM13194002

With probability p, you will catch a disease that reduces your income from y, its level when you are healthy, to y-k, where k > 0. A vaccine is available, at cost c, that reduces the probability of your catching the disease from p to q<p.

a) Suppose that you know the values of p, q, y, k, and c, so that the only thing about which you are uncertain is whether you will catch the disease. Write the condition that determines whether or not you should buy the vaccine.
b) Now suppose that you know y, k, and c, but neither p nor q . Which is more relevant to your decision, the percentage amount by which the vaccine reduces the probability of catching the disease (what is usually reported in the press), or the absolute amount? Explain.
c) How do your answers to (a) and (b) change if you are a risk-averse expected-utility maximizer?

Reference no: EM13194002

Questions Cloud

Find the length of the parking lot : the length of a rectangular parking lot is 10 meters less than twice its width, and the perimeter is 448 meters, find the length of the parking lot.

What angle will the wires make with the ground : Guy wires 80 feet long supporrt a 65-foot tall telephone pole. To the nearest degree, what angle will the wires make with the ground.

Define what is the ph of the resulting solution : compounds are dissolved in 1.00 L of w ater: 0.220 mol HA (K a = 1.36 x 10 - 3 ), 0. 18 mol NaA, 0.0 8 mol H 2 SO 4 , and 0.08 mol KOH . What is the pH of the resulting solution?

What is the largest possible total area of the four pens : A farmer wants to enclose a rectangular area with fencing and then divide it into four pens with fencing parallel to one side of the rectangle. She has 600 feet of fencing. What is the largest possible total area of the four pens?

A risk-averse expected-utility maximizer : Which the vaccine reduces the probability of catching the disease (what is usually reported in the press), or the absolute amount.

How many calories are in each food : a slice of pie with a scoop of ice cream has 850 calories. The calories in the pie alone are 100 more than twice the calories in the ice cream alone. How many calories are in each food?

Explain molecules under the same conditions : kinetic energy of 7070 J/mol under certain conditions, what is the root mean square speed of F2(g) molecules under the same conditions?

Compute the ka of the unknow acid : .35 M NaOH solution to reach the equivalence point. Determine the molar mass of the acid and given nthat the pH at the half way point to the equivalent point is 3.86. Calculate the Ka of the unknow acid.

How high does grapefruit go before returning to ground : A grapefruit is tossed straight up with an initial velocity of 58 ft/sec. The grapefruit is 6 feet above the ground when it is released. Its height at time T is given by y=-16T^2+58T+6. How high does the grapefruit go before returning to the groun..

User Account

All Pages