Suppose that John is offered a simple gamble in which a single die is rolled. If the

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Suppose that John is offered a simple gamble in which a single die is rolled. If the die comes up 1 or 2, he wins $60, and if it comes up 3,4,5 or 6 he loses $20. John is just indifferent between taking this simple gamble and not taking it.

(a) What is the expected value of this gamble?

(b) Can you tell from this information whether John is risk averse, risk neutral, or risk loving? Explain.

Related Book For answer-question

Intermediate Microeconomics

ISBN: 978-0393934243

8th edition

Authors: Hal R. Varian

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Posted Date: Feb 20, 2024 07:01 AM

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Suppose that John is offered a simple gamble in which a single die is rolled. If the

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ohns Gamble Analysis a Expected Value Winning outcome probability 26 for 1 or 2 Losing outcome proba... View the full answer

Intermediate Microeconomics

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