Suppose a Person Must Accept One of Three Bets

question 76

Essay

Suppose a person must accept one of three bets:
A. 0.5 chance of winning $100 and 0.5 chance of losing $100.
B. 0.75 chance of winning $100 and 0.25 chance of losing $300.
C. 0.9 chance of winning $100 and 0.1 chance of losing $900. Show that all of these are fair bets.

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Definitions:

Hidden Unemployment

Unemployment that includes individuals who have stopped looking for work or those who are underemployed, not fully reflected in official unemployment statistics.

Unemployment Compensation

Financial payments made to individuals who have lost their job until they find new employment, typically administered by government agencies.

Part Time

Employment with fewer hours per week compared to full-time jobs, often offering less benefits and lower pay.

Voluntarily Retired

Individuals who have chosen to exit the workforce and end their professional careers by choice rather than by necessity or force.