1. For each of the following scenarios, determine whether the consumer's preferences are consistent with her...

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1. For each of the following scenarios, determine whether the consumer's preferences are consistent with her being an expected utility maximiser. Justify your answer: if it is yes, explain why, and if it is not, provide a proof by counterexample. (b) When attending events with a dress code, Mei prefers formal dress to casual dress, and she prefers casual dress to business casual dress. Assume her preferences are transitive, so she also prefers formal dress to business casual dress. Mei only cares about the number of dress codes she may need to prepare for. That is, when faced with a lottery, she identifies how many dress codes have a positive probability of occurring. Whenever two lotteries have a different number of possible dress codes, she always prefers the lottery with fewer possible dress codes. Whenever two lotteries have the same number of possible dress codes, she is indifferent between them. 1. For each of the following scenarios, determine whether the consumer's preferences are consistent with her being an expected utility maximiser. Justify your answer: if it is yes, explain why, and if it is not, provide a proof by counterexample. (b) When attending events with a dress code, Mei prefers formal dress to casual dress, and she prefers casual dress to business casual dress. Assume her preferences are transitive, so she also prefers formal dress to business casual dress. Mei only cares about the number of dress codes she may need to prepare for. That is, when faced with a lottery, she identifies how many dress codes have a positive probability of occurring. Whenever two lotteries have a different number of possible dress codes, she always prefers the lottery with fewer possible dress codes. Whenever two lotteries have the same number of possible dress codes, she is indifferent between them.

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To determine whether Meis preferences are consistent with her being an expected utility maximizer we need to assess if her preferences satisfy the axi... View the full answer