Suppose that Betty is facing two options a and b. a gives Betty $4 on Tuesday, while b gives Betty $5 on Wednesday. Betty's utility function over money is given by u(x) = x2. Suppose that Betty is an exponential discounter and she prefers option a to option b on Monday. What is the range for Betty's discount factor? Draw Betty's "time indifference curve" that go through option a and her "time indifference curve" that go through option b on the same graph

Suppose that Betty is facing two options a and b. a gives Betty $4 on Tuesday, while b gives Betty $5 on Wednesday. Betty's utility function over money is given by u(x) = x2. Suppose that Betty is an exponential discounter and she prefers option a to option b on Monday. What is the range for Betty's discount factor? Draw Betty's "time indifference curve" that go through option a and her "time indifference curve" that go through option b on the same graph

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.8P

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