What is the expected utility of each prospect

Reference no: EM133287216

Case: Suppose there are three outcomes X = { 10 , 20 , 30 } . An individual has a utility function u ( x ) = x 2 defined on the outcome set X . What is the expected utility of prospect ( 1 3 , 1 3 , 1 3 ) ? What is the expected utility of ( 2 3 , 0 , 1 3 ) ? Which prospect does an individual with such a utility function on outcomes prefer? How does the answer to the last question change if u ( x ) = ( x - 30 ) 2 ? Explain.

What is the expected utility of each prospect? What is the expected utility of ( 2 3 , 0 , 1 3 ) ? Which prospect does an individual with such a utility function on outcomes prefer? How does the answer to the last question change if u ( x ) = ( x - 30 ) 2 ? Explain.

Reference no: EM133287216

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