solution
Suppose my utility function for asset position x is given by u(x)=In x. I now have $10000 and am considering the following two lotteries: L1: With probability 1, I lose $2000. L2: With probability 0.8, I gain $0, and with probability 0.2, I lose $5000. What is expected utility of Ll and L2? Determine which […]


