Question

Using the probability weighting function: w(p) = p γ (p γ + (1 − p) γ...

Using the probability weighting function: w(p) = p γ (p γ + (1 − p) γ ) 1/γ Calculate the perceived expected value of a 1% chance of winning $100, when γ = .9, .75, and .5.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Problem 3: (Application of the prospect theory probability weighting function): A famous implication of prospect theory...
Problem 3: (Application of the prospect theory probability weighting function): A famous implication of prospect theory is a preference for positively skewed prospects and an aversion to negatively skewed prospects. For example, Tversky and Kahneman (1992) found that people frequently preferred: 1) Gaining $95 with certainty over a 95% chance of gaining $100 and a 5% chance of gaining $0. 2) Losing $5 with certainty over a 5% chance of losing $100 and a 95% chance of losing $0. 3)...
In a game, you have a 1/20 probability of winning $75, a 7/20 probability of winning...
In a game, you have a 1/20 probability of winning $75, a 7/20 probability of winning $0, and a 3/5 probability of loosing $9. There is no fee to play the gam. What is your expected value?
Willy wants to maximize the chance (W) that the Seminoles will win their game against Clemson....
Willy wants to maximize the chance (W) that the Seminoles will win their game against Clemson. He has 34 hours that his team can spend preparing for the game. This time can be split between practices (P) and film study (F). The probability of winning, W, as a function of hours spent practicing and studying films is given below. What combination of P and F should Willy use to maximize W? What is the probability that the Seminoles will win...
Let 0 <  γ  <  α . Then a 100(1 −  α )% CI for μ...
Let 0 <  γ  <  α . Then a 100(1 −  α )% CI for μ when n is large is Xbar+/-zγ*(s/sqrt(n))The choice γ = α /2 yields the usual interval derived in Section 8.2; if γ ≠ α /2, this confidence interval is not symmetric about . The width of the interval is W=s(zγ+ zα-γ)/sqrt(n). Show that w is minimized for the choice γ = α /2, so that the symmetric interval is the shortest. [ Hints : (a)...
Suppose that Elizabeth has a utility function U= (or U=W^(1/3) ) where W is her wealth...
Suppose that Elizabeth has a utility function U= (or U=W^(1/3) ) where W is her wealth and U is the utility that she gains from wealth. Her initial wealth is $1000 and she faces a 25% probability of illness. If the illness happens, it would cost her $875 to cure it. What is Elizabeth’s marginal utility when she is well? And when she is sick? Is she risk-averse or risk-loving? What is her expected wealth with no insurance? What is...
Suppose you are endowed with with a utility function over wealth given by: u(w) = 7w...
Suppose you are endowed with with a utility function over wealth given by: u(w) = 7w + 100. Further, suppose you are offered a gamble that pays $10 with probability 30% and $100 with probability 70%. (A) What is the expected value of this gamble? (B) Would you rather have the gamble, or a guaranteed $70? (C) Now suppose your utility function is u(w) = 100w − 18. How does your answer in (B) change? (D) Suppose the utility function...
Probability Mass Function Question 1. Transmitter transmits with some probabilities of some messages. P[X=x] = {...
Probability Mass Function Question 1. Transmitter transmits with some probabilities of some messages. P[X=x] = { 1/2, 1/4, 1/8, 1/16, 1/32, 1/64, 1/128, 1/128} Messages = { I, YOU, WE, ME, THEY, HE, SHE, IT} Probability is corresponding. (a) What is the probability that exactly 2 vowels are received when two messages are transmitted. (b) Probability that out of 5 messages, we have received atleast one H. (c) On an average, when we Receive 5 messages, what is the expected...
12 Suppose that Pengsoo has a utility function U(W)=√W, where W is his income in millions...
12 Suppose that Pengsoo has a utility function U(W)=√W, where W is his income in millions of dollars. If he runs his own business, he can earn 4 million dollars a year when the weather is good with probability of 1/3 and 1 million dollars a year when the weather is bad with probability of 2/3. If he chooses a fixed income job, he can earn 1.8 million dollars a year for sure. (6 points) (12-1) Compare Pengsoo’s expected incomes...
1. f is a probability density function for the random variable X defined on the given...
1. f is a probability density function for the random variable X defined on the given interval. Find the indicated probabilities. f(x) = 1/36(9 − x2);  [−3, 3] (a)    P(−1 ≤ X ≤ 1)(9 − x2);  [−3, 3] (b)    P(X ≤ 0) (c)    P(X > −1) (d)    P(X = 0) 2. Find the value of the constant k such that the function is a probability density function on the indicated interval. f(x) = kx2;  [0, 3] k=
5. A continuous random variable ? has probability distribution function ?(?) , where ?(?) = ?(1...
5. A continuous random variable ? has probability distribution function ?(?) , where ?(?) = ?(1 − ? 2 ) ??? − 1 < ? < 1. (a) Find the value of ?. (b) Compute the expected value of the random variable ?. (c) Find the variance of the random variable ?. (d) Calculate the ?(? < 0)?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT