Completed quickly and followed instructions given. Grammar, spelling, etc. was all good as well. Thank you so much! Will hire in the future.
Ann is an expected utility maximizer and her utility function is given by u(x) = x0.5. Ann’s friend, Bob has offered to bet with her $10,000 on the outcome of the toss of a coin. That is, if the coin comes up heads, Ann must pay Bob $10,000 and if the coin comes up tail, Bob must pay Ann $10,000. The coin is a fair coin, so that the probability of heads and the probability of tails are both 1/2. Ann has $100,000 and is trying to figure out whether she should take the bet. Note that if Ann accepts the bet and heads comes up, she will have 100,000-10,000 = 90,000.
(a) If Ann accepts the bet, then if tails comes up, she will have how much money?
(b) What is Ann’s expected utility if she accepts the bet?
(c) What is Ann’s expected utility if she does not accept the bet?
(d) Does Ann take the bet? Explain why or why not Ann takes the bet.
(e) Ann later asks herself, If I make a bet where I lose all my money, that is all my $100,000 if the coin comes up heads, what is the smallest amount that I would have to win in the event of tails in order to make the bet a good one for me to take? Find the answer to Ann’s question.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more