Natalie entered a raffle recently and never checked her tickets. She has recently learned the exact number of the other unchecked tickets. Based on this information she knows that there is a 30% chance that she has won the raffle prize of $1,600. If she does not win the raffle her wealth will be zero. Natalie has a von Neumann- Morgenstern utility such that she wants to maximize the expected value of cvc, where cc is total wealth. What is the minimum price for which Natalie would sell her raffle tickets? $

Natalie entered a raffle recently and never checked her tickets. She has recently learned the exact number of the other unchecked tickets. Based on this information she knows that there is a 30% chance that she has won the raffle prize of $1,600. If she does not win the raffle her wealth will be zero. Natalie has a von Neumann- Morgenstern utility such that she wants to maximize the expected value of cvc, where cc is total wealth. What is the minimum price for which Natalie would sell her raffle tickets? $

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.1P

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