Question: A person with natural logarithmic utility (ln function) has current net wealth of $50 and is also given a lottery ticket that pays $20 20%

  1. A person with natural logarithmic utility (ln function) has current net wealth of $50 and is also given a lottery ticket that pays $20 20% of the time and $0 80% of the time. What is the minimum price this person would accept to sell their lottery ticket?
  1. $0, this person hates risk of any kind and will be happy to rid themselves of the uncertainty
  2. $1.82
  3. $3.71
  4. $4.00
  5. $4.64

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