A risk averse agent, a risk neutral agent, and a risk loving agent each face the risky situation ($684, $193; 1-0.45, 0.45). Suppose the general form of each agent's utility function is U($X) - a ($X - $Min)^b where a is a strictly positive individual-specific-parameter and where b-0.5 for the risk averse agent and b - 2 for the risk loving agent. What is the combined total sum of the three agents' U(EV)? Please compute and state your answer up to two decimal.places

A risk averse agent, a risk neutral agent, and a risk loving agent each face the risky situation ($684, $193; 1-0.45, 0.45). Suppose the general form of each agent's utility function is U($X) - a ($X - $Min)^b where a is a strictly positive individual-specific-parameter and where b-0.5 for the risk averse agent and b - 2 for the risk loving agent. What is the combined total sum of the three agents' U(EV)? Please compute and state your answer up to two decimal.places

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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