Logo
Home Study Material Contact Search
AI Chat FREE
  1. mathematics
  2. statistics
  3. asset a pays $1,500 with certainty, while asset b

Asset A pays $1,500 with certainty, while asset B pays $2,000 with probability 0.8 or $100...

70.2K

Verified Solution

Question

Statistics

Asset A pays $1,500 with certainty, while asset B pays $2,000with probability 0.8 or $100 with probability 0.2. If offered thechoice between assets A and B, a particular decision maker wouldchoose asset A. Asset C pays $1,500 with probability 0.25 or $100with probability 0.75, while asset D pays $2,000 with probability0.2 or $100 with probability 0.8. If offered the choice betweenassets C and D, the decision maker would choose asset D. Show thatthe decision maker's preferences violate the independenceaxiom.

PLEASE HELP SHOW WORK PLEASE!!

Answer & Explanation Solved by verified expert
3.9 Ratings (630 Votes)
First let us compute the expected choice for each assetifthen where Z 100 and p is the probabilityFor AEA 1500 1 100 0 1500EB 2000 08 100 02 1600 20 1620Hence for B A    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Physics
1.2K views

The ratio of angular speed and tangential speed of electron in nth orbit of hydrogen...

Statistics
1.2K views

A statistician selected a sample of 16 accounts receivable and determined the sample standard deviation of $400....

Psychology
1.2K views

Given the time frame, why might Japanese imperialism not only have been expected, but even considered...

Electrical Engineering
1.2K views

MATLAB ONLY: Write a user defined method MaxPath() Find the maximum path sum in matrix. The maximum...

Physics
1.2K views

Q1 A car with a mass of 1100 kg is travelling at a speed of...

Statistics
1.2K views

8 The radon levels measured in becquerels per cubic meter Bq m3 in the inner...

Calculus
1.2K views

The figure below shows the level curves of a function f x y around a...

Algebra
1.2K views

am must fly home to city A from a business meeting in city B One...

Accounting
1.2K views

When Patey Pontoons issued 10% bonds on January 1, 2018, with a face amount of...

Accounting
1.2K views

Suppose your company sells services of $350 in exchange for $220 cash and $130 on...

Accounting
1.2K views

Using the info prepare the operating activities section of the statement of cash flows for...

Finance
1.2K views

Hercules Exercise Equipment Co. purchased a computerized measuring device two years ago for $74,000. The...