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%

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?

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Solution The utility function of the person can be represented as UW lnW Where W is the persons wealth The expected utility of having the lottery tick... View full answer

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