Using the Textbook Quantitative Methods for Business, edition 13; refer to #1 in the back of chapter 5 on page 187. For the lottery having a payoff of $100,000 with probability p and $0 with probability( 1-p), two decision makers expressed the following indifference probabilities. Find the most preferred decision for each decision maker using the expected utility approach. QUESTION: What is the utility of a payoff of 25, 50 and 75 for decision maker A? U (100) = 10 and U (0) =0

Profit Decision Maker A Decision Maker B

$75,000 0.80 0.60

$50,000 0.60 0.30

$25,000 0.30 0.15

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