Question: Malee who is risk averse has two pieces of jewelry

Malee, who is risk averse, has two pieces of jewelry, each worth $ 1,000. She plans to send them to her sister’s firm in Thailand to be sold there. She is concerned about the safety of shipping them. She believes that the probability that any box shipped will not reach its destination is θ. Is her expected utility higher if she sends the articles together or in two separate shipments?

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  • CreatedNovember 13, 2014
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