Diminishing marginal utility of dollars

Reference no: EM1368307

A mathematically fair bet is one in which the amount won will on average equal the amount bet,for example, when a gambler bets say, $100 for a 10 percent chance to win $1000 ($100=.10x$1000). Assuming diminishing marginal utility of dollars, explain why this is not a fair bet in terms of utility. Why is it even a less fair bet when the house takes a cut of each dollar bet? So is gambling irrational?

Reference no: EM1368307

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