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The Decision Maker Now Has $15,000 and Two Possible Decisions

question 105

Essay

The decision maker now has $15,000 and two possible decisions. For decision 1, she loses $1,000 for certain. For decision 2, she loses $0 with probability 0.9 and loses $4,000 with probability 0.10. Which decision maximizes the expected utility of her net wealth?


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