You are attempting to establish the utility that your boss assigns to a payoff of $1,500. You have established that the utlity for a payoff of $0 is zero and the utility for a payoff of $10,000 is one. Your boss has just told you that they would be indifferent between a payoff of $1,500 anda lottery which has a payoff of $10,000 where the probability of losing is 0.4. What is your boss' utility for $1,500? (Round your answer to 1 decimal place.) Utility of $1,500

You are attempting to establish the utility that your boss assigns to a payoff of $1,500. You have established that the utlity for a payoff of $0 is zero and the utility for a payoff of $10,000 is one. Your boss has just told you that they would be indifferent between a payoff of $1,500 anda lottery which has a payoff of $10,000 where the probability of losing is 0.4. What is your boss' utility for $1,500? (Round your answer to 1 decimal place.) Utility of $1,500

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 22P: Three decision makers have assessed utilities for the following decision problem (payoff in...

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Three decision makers have assessed utilities for the following decision problem (payoff in dollars): The indifference probabilities are as follows: Plot the utility function for money for each decision maker. Classify each decision maker as a risk avoider, a risk taker, or risk-neutral. For the payoff of 20, what is the premium that the risk avoider will pay to avoid risk? What is the premium that the risk taker will pay to have the opportunity of the high payoff?
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