Jeff holds 50000 wealth which has a utility of 707 utils


Jeff holds $50,000 wealth which has a utility of 7.07 utils (assuming utility is the square root of wealth in thousand dollars). He considers investing this in a gamble which has a 0.6 probability of increasing his total wealth to $100,000 and 0.4 probability of decreasing it to $30,000. What will be Jeff's expected utility from the gamble?

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Econometrics: Jeff holds 50000 wealth which has a utility of 707 utils
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