Equivalent of participating in gamble

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A consumer has utility u(x)=x^ms and a base wealth of 100k she is about to take part in a gamble that will give her 10k bringing her to 110k if a fair die rolls less than 3 (probablity 1/3), but will cost her 5k leaving her with 95k otherwise

  • What is the certainty equivalent of participating in this gamble?
  • How much would she be willing to pay to not have to take this gamble?

Reference no: EM131459769

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