Consider the St. Petersburg paradox. Decision- maker has an exponential utility function with A=4 and B=2 and the risk tolerance level is R=7,000. What is the highest price that the decision-maker is willing to pay for the lottery?

Consider the St. Petersburg paradox. Decision- maker has an exponential utility function with A=4 and B=2 and the risk tolerance level is R=7,000. What is the highest price that the decision-maker is willing to pay for the lottery?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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