Question: More concavity in a utility function indicates lower levels of risk-tolerance. Diminishing marginal utility means that after a certain level of wealth W_max, an increase

More concavity in a utility function indicates lower levels of risk-tolerance.

More concavity in a utility function indicates lower levels of risk-tolerance. Diminishing marginal utility means that after a certain level of wealth W_max, an increase in wealth results in reduction of investor's utility. The subjective utility value associated with W0 is higher than UD. Diminishing marginal utility leads to the concavity of the utility function

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