Kata Bognar
[email protected]
Economics 142
Probabilistic Microeconomics
UCLA
Fall 2008
Homework Assignment 1.
Due date: October 14, 2008
1.
(Independence Axiom)
Ilsa Lund has a share in the local food coop so every
[5]
sunday she gets a basket of fruits. Unfortunately for Ilsa, the content of the fruit
basket is uncertain. However she can choose from different options.
Basket I has
apples
with probability
1
/
3
bananas
with probability
1
/
6
oranges
with probability
1
/
2
Basket II has
mangos
with probability
1
/
5
oranges
with probability
4
/
5
Basket III has
bananas
with probability
1
/
3
mangos
with probability
4
/
15
oranges
with probability
2
/
5
Basket IV has
apples
with probability
4
/
9
bananas
with probability
5
/
9
.
Assume that Ilsa’s preferences satisfy the Independence Axiom and she is indif
ferent between Basket I and Basket II. How does she rank Basket III and Basket
IV? Please explain your answer.
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 Fall '09
 Bognar
 Microeconomics, Probability, Game Theory, Utility, Rick Blaine, Ilsa Lund

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