Create similar table but based on quadratic utility function

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Reference no: EM131524517

Question: Suppose that a decision maker has the following utility function:

U(x) = -0.000156x² + 0.028125x - 0.265625

Use this utility function to calculate risk premiums for the gambles shown in Tables 14.3 and 14.4; create a similar table but based on this quadratic utility function. How would you classify the risk attitude of a decision maker with this utility function? Does such a risk attitude seem reasonable to you?

1617_14.3.png

364_14.4.png

Reference no: EM131524517

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