Decision Tree

Prob. 1. You must choose between the two projects below. What is the EMV for each? Looking at your own personal Risk Utility Function, which project would you select and why?

Project 1 has a 70% chance of earning $500,000, and a 30% chance of losing $100,000.

Project 2 has a 20% chance of earning $2 million, a 20% chance of earning $1 million, and a 60 percent chance of losing $500,000.

Explain your work