Your family is offering you your choice of two alternatives. The first alternative is to give you a money gift of $19,000. The second alternative is to make an investment in your name. This will quickly have the following two possible outcomes:

Outcome Probability
Receive $10,000 0.3
Receive $30,000 0.7

(a) Your utility for receiving M thousands dollar is given by the utility function u(M) = SQRT(M+6). Which choice should you make to maximize expected utility?

(b) You now are uncertain about what your true utility function for receiving money is, so you are in the process of constructing this utility function. So far, you have found that u(19) = 16.7 and u(30) = 20 are the utility of receiving $19,000 and $30,000 respectively. You also have concluded that you are indifferent between the two alternatives offered to you by your family. Use this information to find u(10).

... This is also called the subjective expected utility (SEU) to indicated that probabilities may be based on subjective beliefs and the utilities may reflect ...

Calculate the expected value and expected utility of the given projects. ... Calculate the expected utility of each project and identify the preferred projec. ...

Quantitative Methods and Decsion Making : Expected Values and Expected Utility. ... Decsion-Making, Expected Values and Expected Utility are investigated. ...

... a. Calculate JoeĆ¢??s expected utility level without any health insurance coverage. ... This posting offers help with calculating expected utility levels. ...

Expected Utility and Risk Aversion. ... I know how to get the Expected Utility without insurance, I think. EU = pU(I not hurt) + (1-p) U(i if hurt). No problem. ...

...Expected utility if he takes Broad street = utility of time required in case of congestion*probability of congestion+ utility of time required if it is not ...