Question: Adam, Brian, Chris are friends whose preferences over wealth, , can be represented by the utility functions: !() = , #() = 2, and $()

Adam, Brian, Chris are friends whose preferences over wealth, , can be represented by the utility functions: !() = ", #() = 2, and $() = . All three friends are offered the same lottery, , in which they can get wither $36 or $16. The probability of getting the highest value is 20%. Consider the expected value, E(), and the variance, Var(), of lottery . Which of the following alternatives is correct? (a) E() = $20 and Var() = $64 (b) E() = $26 and Var() = $100 (c) E() = $10 and Var() = $36 (d) E() = $4.40 and Var() = $0.64

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