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) O Mike's utility of wealth function must be concave. O Mike must be risk averse. O For Mike, it must be the case that U(EVIX) > $10. O IF Mike had to choose between Prospect X and receiving $9 with certainty, he would choose the $9.

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) O Mike's utility of wealth function must be concave. O Mike must be risk averse. O For Mike, it must be the case that U(EVIX) > $10. O IF Mike had to choose between Prospect X and receiving $9 with certainty, he would choose the $9.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.7P

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