Question: Behavioural Economics 1. [4 marks] Jane has a utility function of monetary gains given by u(x) = J5. a. What is her expected utility of

Behavioural Economics 1. [4 marks] Jane has a utility function of

Behavioural Economics

1. [4 marks] Jane has a utility function of monetary gains given by u(x) = J5. a. What is her expected utility of getting $100 for sure? [1 mark] b. What is her expected utility from a gamble in which she wins nothing with 50% probability and wins $200 with 50% probability? [1 mark] c. Comparing your answers to parts a and b, how can you describe Jane's preferences for money? Choose one of the following options: [2 marks] i) risk neutral ii) risk loving iii) risk averse iv) none of the above

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