What is the marginal expected utility of this game to you

Reference no: EM13614820

1. Assume your utility function is the square root. If your current total wealth is 16 thousand dollars, what is the marginal utility of the next 100 dollars you will make?

2. Assume your utility function is the natural log. Your initial wealth is 14.7 thousand dollars. How much extra money must you make in order to increase your utility by 1 unit?

3. Your utility function is the square root, and your current wealth is 8.6 thousand dollars. You are offered a game of fair coin toss, wherein you win 200 on heads, and lose 100 on tails.

What is the marginal expected utility of this game to you? (In other words, how much more utility than your initial state will you get, on average, by accepting to play this game?)

Remember that expected utility is the expected value of your total utility over possible outcomes.

Reference no: EM13614820

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