Question

Given a choice between A (a sure win of 100) and B (an 80 percent chance to win 150 and a 20 percent chance to win 0), Smith picks A. But when he is given a choice between C ( a 50 percent chance to win 100 and a 50 percent chance to win 0) and D (a 40 percent chance to win 150 and a 60 percent chance to win 0), he picks D. Show that Smith’s choices are inconsistent with expected utility maximization.



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  • CreatedDecember 12, 2014
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