Suppose That the Utility Function for a Decision Maker Is

question 50

Essay

Suppose that the utility function for a decision maker is represented as follows:
U(x)= x².The potential payoffs that are possible are illustrated below.
Payoff (x)
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1000
Convert these payoffs into utility values using the above function.Plot the utility curve and determine whether the decision maker is a risk avoider,risk indifferent,or a risk seeker.

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