Suppose a Person Has a Risk Averse Utility Function of U(W)=

question 6

Multiple Choice

Suppose a person has a risk averse utility function of U(W) = √(Wealth) .Also, suppose her initial wealth is $2,500.She can choose to play a game with a 50% chance of winning $1,100 and a 50% chance of losing $900.Would she choose to play the game ?

• A)yes
• B)no
• C)she will be indifferent between playing and not playing

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Definitions:

Stimulus

Any event or situation that evokes a response from an organism.

Artistic Intelligence

An aspect of intelligence that involves the capacity to solve problems or create products by using artistic skills and creativity.

Naturalistic Intelligence

A type of intelligence proposed by Howard Gardner, relating to how well an individual can understand and interact with the natural world.

Spatial Intelligence

The ability to visualize with the mind's eye, relating to the capacity to think about objects in three dimensions and to make inferences about those spatial relationships.