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What are the maximum and minimum possible

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Assume that the decision maker is risk averse. You know that his certainty equivalent for (0.4?0)⊕(0.6?10) is 5. What are the maximum and minimum possible prices that he may be willing to pay in order to win the lottery that has an equal chance to receive 5 or 10, that is, (0.5?5)⊕(0.5?10)? (HINT: normalize u(0) = 0) normalize u(0)= 0 does it mean that at the same time i need to assume u(10)=1?if not, how should i solve the problem?

Reference no: EM132414934

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