3. Consider the following options:
Lottery A. Take $1 million for sure .
Lottery B. Get $5 million with probability 0.9 (and nothing otherwise).
Lottery C. Get $1 million with probability 0.1 (and nothing otherwise).
Lottery D. Get $5 million with probability 0.9 (and nothing otherwise).
(By the way, how would you rank A vs. B and C vs D?)
For the DM to be consistent with Expected utility hypothesis, we must have
I would rank B and D first, A second,... View the full answer
- How about A is strictly preferred to B if and only if D is strictly preferred to C ？
- May 04, 2018 at 11:56pm