Mike is the proud owner of Prospect X,which he values at $10 (so, for Mike, CE(X) =%3D$10).If EV(X) = $12, what is the most you can sayabout Mike's risk preferences and/or hisutility of wealth function?(Select all that apply)Mike's utility of wealth function must beconcave.Mike must be risk averse.O For Mike, it must be the case that U(EV(X)) >$10.O If Mike had to choose between Prospect Xand receiving $9 with certainty, he wouldchoose the $9.

The theory of expected utility integrates personal preferences with probabilities to investigate…

Mike is the proud owner of Prospect X, which he values at $10 (so, for Mike, CE(X) = $10). If EV(X) = $12, what is the most you can say about Mike's risk preferences and/or his utility of wealth function? (Select all that apply)

Mike is the proud owner of Prospect X, which he values at $10 (so, for Mike, CE(X) = $10). If EV(X) = $12, what is the most you can say about Mike's risk preferences and/or his utility of wealth function? (Select all that apply)

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Question

Mike is the proud owner of Prospect X,
which he values at $10 (so, for Mike, CE(X) =
%3D
$10).
If EV(X) = $12, what is the most you can say
about Mike's risk preferences and/or his
utility of wealth function?
(Select all that apply)
Mike's utility of wealth function must be
concave.
Mike must be risk averse.
O For Mike, it must be the case that U(EV(X)) >
$10.
O If Mike had to choose between Prospect X
and receiving $9 with certainty, he would
choose the $9.

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