Optlon 1 Option 2 Probability of Possible Probablity Possible Outcome Outcomes ($) of Outcome Outcomes ($) 1/16 150 1/5 120 4/16 300 1/5 255 6/16 750 1/5 1,500 4/16 300 1/5 255 1/16 150 1/5 120

Q: 8. With an American penny, the likelihood of getting H when it is spun on edge is 0.3. If X is the…

A: Let X be a standard variable and have 2 values x1,x2 with related probabilities p(x1),p(x2) Expected…

Q: The more risky future options or alternatives are a) the less rational people will necessarily be.…

A: Option B is Correct the more future values must be discounted to obtain their present values. The…

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A: The optimal managerial compensation contract is portrayed in a climate in which the. administrator…

Q: Question One. The ABC Book Company has a choice of publishing one of two books on the subject of…

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Q: Suppose you identify 50 possible investments whose payoffs are completely independent of one…

A: Here, 50 investments are given and they all are independent from each other.

Q: You hold an oral, or English, auction among three bidders. You estimate that each bidder has a value…

A: Without Collusion (Original Scenario): The winning bidder's payment is always the same as the amount…

Q: Question 1) An expected utility maximiser owns a car worth £60000 and has a bank account with…

A: Note:- “Since you have asked multiple question, we will solve the first question for you. If you…

Q: Number of contestants prize if tryout is held Income to a person if they stay at home Expected…

A: The expected value of tryout = expected prize = (Prize of the tryout) / (number of persons trying…

Q: A plaintiff believes that there is a 30% chance that he will winIf he wins, he will gain $50,000. It…

A: It is given that there is a 30% chance of winning. The gain is $50,000 if he wins and there are…

Q: The expected value of project Red is

A: Expected value of a variable is defined as the predicted value of the variable. It is calculated by…

Q: theft. The insurance company quotes a price of an additional $14 gainst theft. e a risk-neutral…

A: *a If you are a risk-neutral expected payoff maximizer, you would be indifferent between insuring…

Q: Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan,…

A:

Q: Obi-Wan is considering whether to buy a lightsaber. With probability 0.50 he will value the…

A: Expected value:The expected value is simply a weighted average of all possible values of a random…

Q: c. The United Nations have constructed an index of overall 'world happiness' that is given by the…

A: World Happiness = 2×(Happiness Score) + 3Life Expectancy

Q: 6)  For the payoff table below, the decision maker will use P(s1) = .15, P(s2) = .5, and P(s3) =…

A: Probabilities of each strategy: P(s1) = 0.15, P(s2) = 0.5, and P(s3) =0.35 Payoff matrix:   S1…

Q: A manager is deciding whether to build a small or a large facility. Much depends on the future…

A: Game theory in economies studies the strategic interactions among rational decision-makers. It helps…

Q: What is the expected value of this gambling game?

A:

Q: Consider the lottery that assigns a probability r of obtaining a level of consumption CH and a…

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Q: There are two types of projects in the market: A (safer) and B (riskier). At time 1, the payoff of A…

A: Expected Returns = ∑ Probability * Returns  Discounted Value at time (t =0 )   = x/ ( 1 +  r )

Q: You are trying to decide between rescuing a puppy or an older dog. You decide to try to assign some…

A: Utility when the dog chews furniture = 0.1 Utility when dog goes on hike = 0.8  Expected Utility =…

Q: Suppose that the probability of low demand is 0.75.   (a) What is the maximum Expected Monetary…

A: The law of demand is a basic rule of economics that states that at a higher price consumers will…

Q: suppose you pay 25 dollars to enter into a raffle with a 400 dollar prize. if you have a 5% chance…

A: Expected Value = ∑payoff *probability here the winning is $400 with cost of $25. So our actual gain…

Q: 4) Consider investors with preferences represented by the utility function U E(r) – Ao². (a) Draw…

A: An indifference curve (IC) is a graphical representation of various combinations of consumption…

Q: You take a position with a large real estate development company as your first job after graduation.…

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Q: You are considering two options for your next family vacation. You can visit Disney World or…

A: Here we are given consumer's utility under the uncertain situations. Here consumer will make his…

Q: 1. George maximizes expected utility and he has a von-Neumann-Morgenstern utility function u (c) =…

A: Utility = c1/2  Initial Wealth = $1000 success rate = 9% If successful then payoff = $100,000 Payoff…

Q: 19. An individual has initial wealth Wo = 3 and has the opportunity to invest some quantity of money…

A: Expected utility is derived using a utility function for an individual, an enterprise, or an…