Question: 4. Let Mar) = 532 + 73: with ,3 4. Let u(x) x2 + with /3 < O and x e [O, 7/(21/31)] (this is

4. Let u(x) x2 + with /3 < O and x e

4. Let Mar) = 532 + 73: with ,3

4. Let u(x) x2 + with /3 < O and x e [O, 7/(21/31)] (this is needed to guarantee utility is increasing for all x). Show that the expected utility over a lottery is entirely characterized by the expected value and the variance of such a lottery. That is, for quadratic Bernoulli utility functions, only the mean and the variance of any lottery matter.

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