ger's utility/u as a function of wealth/w is u = { ln w,         w < 1600           w1/2,        w >= 1600   Roger has $1000 and 3 options.  1. spend $400 to enter the game with probabilities of winning or losing: Win/(Lose) (500) 0 1000 3000 P(Win/(Lose)) 0.2 0.1 0.6 0.1 a. Show with workings which option roger would choose.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Roger's utility/u as a function of wealth/w is

u = { ln w,         w < 1600

          w1/2,        w >= 1600

 

Roger has $1000 and 3 options. 

1. spend $400 to enter the game with probabilities of winning or losing:

Win/(Lose) (500) 0 1000 3000
P(Win/(Lose)) 0.2 0.1 0.6 0.1

a. Show with workings which option roger would choose.

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