Question: (a) Consider the Fechner model outlined in Section 6.4. That is, individuals all have CRRA utility, with the same risk aversion parameter, r . For

(a) Consider the Fechner model outlined in Section 6.4. That is, individuals all have CRRA utility, with the same risk aversion parameter, r . For any individual, the safe choice is made if:

EU (S) − EU (R) + > 0 where is a Fechner error term, ∼ N

0, σ2

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