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ShellA_fin645hw2

# ShellA_fin645hw2 - y is it he studied If someone estimates...

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Problem 3-2 A. Decision (ii). Chosse between: A(0.80, \$50, \$0) and B(0.40, \$100, \$0) B. Decision (ii). Choose between: C(0.00002, \$500,000, \$0) D(0.00001, \$1,000,000, \$0) C. Are these choices consistent with expected utility theory? Why or why not I believe they are consistent wit expected utility theory because what I saw when making my de ending amount of wealth. For decision (i), the decision would be prospect B because there is a 40 % percent chance tha For decision (ii), the decision would also be prospect D for the same reasons.

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ecision was which had the higher gain. With expected utility theory, it is assumed that people decid at there would be a gain of 100. People would look at the ending wealth when making a decision.
de based on the

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Problem 5-3 Rex is a smart fellow. He gets an A in a course 80% of the time. Assuming he got an A, how likely They are being biased. It seems that they are making assumptions based on his grade, but didn't course 80% of the time Rex receives an A, they are forgetting that he does not study until final exa

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Unformatted text preview: y is it he studied? If someone estimates the above to be 75%, what error are they committing? Expl take into consideration other factors that may determine how much he actually studys. Although in ams in 50% of his courses. lain in the problem 4-3 If he suffered from huris (which is extreme pride and arrogance), I would have to relate this behavi the same average every season relates to excessive optimism. Clearly, he has no thoughts that h also be overconfident because hitting a very high average every season is not easy and he may th ior to overconfidence bias and excessive optimisim. Relating him to the baseball player who thinks e may not get the same average or do as well every season. In that case, this is why I would have think he is a better player than what he really is. s he will repeat to say that he may...
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ShellA_fin645hw2 - y is it he studied If someone estimates...

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