Consider two lotteries A and B. With Lottery A, there is a 0.8 probability that you receive

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Consider two lotteries A and B. With Lottery A, there is a 0.8 probability that you receive a payoff of $10,000 and a 0.2 chance that you receive a payoff of $4,000. With Lottery B, you will receive a payoff of $8,800 for certain. You should verify for yourself that these two lotteries have the same expected value, but that Lottery A has a higher variance. For each of the utility functions below, please fill in the table below:
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Microeconomics

ISBN: 978-0073375854

2nd edition

Authors: Douglas Bernheim, Michael Whinston

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