What is the decision makers utility for receiving

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Question: Decision maker's scaled utility function is being assessed over the attribute of net profit, where net profit has a maximum value of $500,000 and a minimum value of -$100,000. Suppose that it has been determined that for this DM, u($300,000) = .5. Suppose also that this DM is indifferent between the two options of: 1) receiving $150,000 for certain, and 2) receiving -$100,000 (i.e., having a loss of $100,000) with probability of .5, and receiving $300,000 with probability of .5. What is the decision maker's utility for receiving $150,000? (i.e., what is u($150,000?). Show your work.

Reference no: EM133387989

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