When the second order derivative of a function is greater than zero than the agent is risk lover.question; Asses the risk attitude of an agent represented by the expected utility function u(x)= 2x2-5.However my course material writes that this agent is risk neutral because it is affine. My question is that whys is this so despite the fact that the second order derivative is '4' which is >0.Kindly explain this to me with complete steps.

Given, Utility Function : u(x)=2x2-5 It is given that the person is a risk loverThe second order…

Answered: When the second order derivative of a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

When the second order derivative of a function is greater than zero than the agent is risk lover.

question; Asses the risk attitude of an agent represented by the expected utility function u(x)= 2x²-5.

However my course material writes that this agent is risk neutral because it is affine. My question is that whys is this so despite the fact that the second order derivative is '4' which is >0.

Kindly explain this to me with complete steps.

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions