a consumer has utility u(x)=x^ms and a base wealth of 100k she is about to take part in a gamble that will give her 10k bringing her to 110k if a fair die rolls less than 3 (probablity 1/3), but will cost her 5k leaving her with 95k otherwise what is the certainty equivalent of participating in this gamble? how much would she be willing to pay to not have to take this gamble?
a consumer has utility u(x)=x^ms and a base wealth of 100k she is about to take part in a gamble that will give
her 10k bringing her to 110k if a fair die rolls less than 3 (probablity 1/3), but will cost her 5k leaving her with 95k otherwise
what is the certainty equivalent of participating in this gamble?
how much would she be willing to pay to not have to take this gamble?
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