# New York University BUSF-SHU BUSF-SHU 304 O 2. (30 points; substantially modified from number 14 on Problem…

New York University BUSF-SHU BUSF-SHU 304 O 2. (30 points; substantially modified from number 14 on Problem…

Suppose that there are two states of the world, s1 and s2, and that an individual who knows the probabilities, p1 and p2, of the two states chooses among state-contingent consumption bundles to maximize the expectation of a state-independent, strictly increasing von Neumann-Morgenstern utility function.
(a) Suppose that the individual is risk-neutral, and that he is indifferent between (8, 2) and (4, 4).  What must the value of p1 be?
(b) Now suppose that the individual may be either risk-averse or risk-loving.  What is the lowest possible value of p1 for which the individual could weakly (or strictly) prefer the state-contingent consumption bundle (6, 2) to the bundle (2, 6)?
(c) Now suppose that the individual is risk-averse, and that he is indifferent between (6, 2) and (2, 6).  Show (graphically or algebraically) that he must weakly prefer (4, 4) to either of these bundles.

Don't use plagiarized sources. Get Your Custom Essay on
New York University BUSF-SHU BUSF-SHU 304 O 2. (30 points; substantially modified from number 14 on Problem…
Just from \$5/Page

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

### Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.