Bills value functionSuppose Bill were to experience a large nega.pdf
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1. Apr 2023•0 gefällt mir•30 views
Bills value functionSuppose Bill were to experience a large nega.pdf
1. Apr 2023•0 gefällt mir•30 views
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Bill's value function: Suppose Bill were to experience a large negative shock to his wealth that does not immediately change his reference point. Could this shock cause him to change his decision concerning the $100 and gamble A? Draw a diagram showing the possible payoffs, Bill's value function and the value of each option. Explain how this diagram illustrates Bill's decision after the shock. Is the diagram below correct?V(x)={x1/22(x)1/2wherex0wherex<0 16:14 Wed 22 Mar (0) (i) 89.
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Bills value functionSuppose Bill were to experience a large nega.pdf
- 1. Bill's value function: Suppose Bill were to experience a large negative shock to his wealth that does not immediately change his reference point. Could this shock cause him to change his decision concerning the $100 and gamble A? Draw a diagram showing the possible payoffs, Bill's value function and the value of each option. Explain how this diagram illustrates Bill's decision after the shock. Is the diagram below correct?V(x)={x1/22(x)1/2wherex0wherex<0 16:14 Wed 22 Mar (0) (i) 89