Seminar 1.docx - Seminar 1 1 What is the expected utility theory Discuss 2 Write the expressions for expected value(EV expected utility(EU and utility

# Seminar 1.docx - Seminar 1 1 What is the expected utility...

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Seminar 1 1. What is the expected utility theory? Discuss. 2. Write the expressions for expected value (EV), expected utility (EU) and utility of expected value (U(EV)) of the lotteries given in the lecture 2. 3. Utility function of an individual is given as ( x ) = √ x . Calculate the EV, EU and U(EV) using one of the lotteries of question 2. Identify the attitude towards risk of the individual using expected utility theory. 4. Assume that the utility function of an individual is given as U ( x ) = x 2 . Find the attitude towards risk of the individual using expected utility theory. 5. Utility function is given by ( x ) = 1 + x 2 . Find the attitude towards risk of the individual

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• Winter '18
• Spencer Barnet

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