Question: Let > 0. A decision maker has a utility function for money of the form Suppose that this decision maker is trying to decide

Let Î± > 0. A decision maker has a utility function for money of the form

Suppose that this decision maker is trying to decide whether or not to buy a lottery ticket for $1. The lottery ticket pays $500 with probability 0.001, and it pays $0 with probability 0.999. What would the values of Î± have to be in order for this decision maker to prefer buying the ticket to not buying it?

U(x)=Ir" if x > 0, x if0.

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