Assume ths Nasequental game. If employer A offers a lew salary, you, as the employee, are best served by v the offer In this case, you would earn a payoff of -the offer. In this and employer A would earn a payoff of Alternatively, if empleyer A offers a high salary, you are best served by case, you wouid eam a payoff of and employer A would earn a payoff of .with this information, employer A will choose to make a offer, since it will yeld a higher payoff for him, based on what you (the employee) will subsequently choose. Suppose you have a competing job offer from employer B. Accepting this yob offer gives a payoff of se.s. Durting your negotiations with employee A you have the option of taking this offer from employer B, and employer A is aware of this offer (as well as the payoff to you). Given this competing offer, the negotiation with employerAs depicted in the following hgure Employee Accept Employee 115 Employer A 78 Employee Reject Employer AO Employee 58.5 Offer Employee Accep Employee: 78 Enployer A 15 Employer Low Oe Enloyee Rect OImployee 55 Employer A 0

Assume ths Nasequental game. If employer A offers a lew salary, you, as the employee, are best served by v the offer In this case, you would earn a payoff of -the offer. In this and employer A would earn a payoff of Alternatively, if empleyer A offers a high salary, you are best served by case, you wouid eam a payoff of and employer A would earn a payoff of .with this information, employer A will choose to make a offer, since it will yeld a higher payoff for him, based on what you (the employee) will subsequently choose. Suppose you have a competing job offer from employer B. Accepting this yob offer gives a payoff of se.s. Durting your negotiations with employee A you have the option of taking this offer from employer B, and employer A is aware of this offer (as well as the payoff to you). Given this competing offer, the negotiation with employerAs depicted in the following hgure Employee Accept Employee 115 Employer A 78 Employee Reject Employer AO Employee 58.5 Offer Employee Accep Employee: 78 Enployer A 15 Employer Low Oe Enloyee Rect OImployee 55 Employer A 0

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.7P

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When the second order derivative of a function is greater than zero than the agent is risk lover. question; Asses the risk attitude of an agent represented by the expected utility function u(x)= 2x2-5. However my course material writes that this agent is risk neutral because it is affine. My question is that whys is this so despite the fact that the second order derivative is '4' which is >0. Kindly explain this to me with complete steps.
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