(Solved) Suppose John’s preference over monetary payoff

Consider the following lottery: with Prob 13 it yields payoff \$0, with Prob 16 it yields \$4, with remaining probability it yields \$9.(a) Calculate the expected payoff of this lottery.(b) Suppose John’s preference over monetary payoff the is represented by the utility function u(w) = 2w+100, where w is the amount of monetary payoff. What’s the certainty equivalent of this lottery for John?(c) Suppose John’s wife Mary has utility function over monetary payoff v(w) =?w. what’s the certainty equivalent of this lotteryfor Mary?

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This question was answered on: Oct 15, 2019

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