A decision maker has a vNM utility function over money of u(x) = x². This decision maker is: O Risk Averse O Risk Neutral O Risk Loving O None of the above

The following table shows cost payoffs for four decision variables and four states of nature. S₁ S2 di 20 20 S S3 54 8 19 4 d2 12 12 40 d3 10 10 16 16 16 d4 30 30 25 20 20 9 110 14 14 Suppose the decision maker assigns the probability for S₁ = 0.10; S2 = 0.40; S3 = 0.20; and S4 = 0.30, what is the expected value of best decision? 21.2 21.8 20 19.2

Thelma is indifferent between $100 and a bet with a 0.6 chance of no return and a 0.4 chance of $200. If U(0) = 20 and U(200) = 220, then U(100) = :

. If you examine the decision tree in Figure 9.12 (orany other decision trees from PrecisionTree), you willsee two numbers (in blue font) to the right of each endnode. The bottom number is the combined monetaryvalue from following the corresponding path throughthe tree. The top number is the probability that thispath will be followed, given that the best strategy isused. With this in mind, explain (1) how the positiveprobabilities following the end nodes are calculated,(2) why some of the probabilities following the endnodes are 0, and (3) why the sum of the probabilitiesfollowing the end nodes is necessarily 1.

Consider an individual with an expected utility function of the form u(w) = √wwhere wrep-resents this individual’s wealth. This individual currently has wealth of $100. This individualfaces a risk of losing $64 with a probability of (1/2). The maximum price that this individualwould pay for insurance that covers the entire $64 loss is?