Xavier, Yolanda, and Zachary Are Considering Whether to Pool Their

question 17

Multiple Choice

Xavier, Yolanda, and Zachary are considering whether to pool their funds to buy into a lottery. There is a 20% chance that they will win big and make $8 million dollars, a 40% chance that they will win second prize and make $2 million, and a 40% chance that they will lose and win nothing. The entrance fee to participate in this lottery is $3 million. The partners decide whether or not to play by majority vote. Assume that Xavier has utility function u(x) = x². The other two partners have utility function u(x) = x, where x is the total amount of money won in the lottery. Will the partners buy in?

• A) All three will vote to buy in, so the partnership as a whole will buy in
• B) Only Xavier will vote to buy in, so the partnership as a whole will not buy in
• C) Yolanda and Zachary will vote to buy in, so the partnership as a whole will buy in

---

Definitions:

Direct Contact

Interaction that involves physical touch or the immediate proximity between individuals, allowing for the transfer of substances or communication.

Direct Instruction

A teacher-centered education approach focused on structured, systematic instruction with clear objectives and outcomes.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired: a response that is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.

Cognitive Dissonance

A psychological phenomenon that occurs when an individual experiences tension or discomfort due to holding two or more contradictory beliefs, ideas, or values at the same time.