Question: Individuals with initial wealth $100 and different preferences over risk are considering purchasing a lottery ticket for $10. The lottery pays $20 with 50% probability,

Individuals with initial wealth $100 and different preferences over risk are

considering purchasing a lottery ticket for $10. The lottery pays $20 with

Individuals with initial wealth $100 and different preferences over risk are considering purchasing a lottery ticket for $10. The lottery pays $20 with 50% probability, and nothing otherwise. Consider the following statements: I. The certainty equivalent of this gamble is higher for the risk-averse individuals, compared to risk-neutral individuals. II. The expected wealth after purchasing the ticket is higher than without purchasing it. Ill. The certainty equivalent of purchasing the lottery ticket is $100 for risk-neutral individuals. O Only Il is correct. O More than one statement is correct. O Only I Is correct. O Only Ill Is correct. O No statement Is correct

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