Practice Exam 2
1.
Take the following gambles:
A
1
=
0.3
$10
B
1
=
0.1
$5
0.7
$0
0.9
$0
A
2
=
0.6
$10
B
2
=
x
$5
0.4
$0
y
$0
Assume that you prefer A
1
to B
1
, and that you prefer B
2
to A
2
. Your preferences can be
summarized by some von-Neumann/Morgenstern utility function for all of the following
values of (x,y)
except
for:
a.
x = 0, y = 1
b.
x = 0.2, y = 0.8
c.
x = 0.7, y = 0.3
d.
x = 0.9, y = 0.1
e.
None of the above
For questions 2 and 3, refer to the following game:
3,0
1,2
2,3
4,1
1,1
2,1
U
D
R
L
R
L
1
2
2
M
M

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