Sometimes economists speak of the certainty equivalent of a risky stream of income. This problem asks you
Question:
a. U (I) = √I.
b. U (I) = ln (I) (where ln means ‘‘natural logarithm’’)
c. U (I) = -1/ I
What do you conclude about these utility functions by comparing these three cases?
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Related Book For
Intermediate Microeconomics and Its Application
ISBN: 978-0324599107
11th edition
Authors: walter nicholson, christopher snyder
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