What can we say about the absolute and relative values

Question

Problem

Consider the following lottery tickets:

(a) ticket 1 gives a return of £600 with a probability of 0.03 and a zero return otherwise;

(b) ticket 2 gives a return of £100 with a probability of 0.18 and a zero return otherwise;

(c) ticket 3 gives a return of £36 with a probability of 0.5 and a zero return otherwise. Individual A is willing to pay prices P₁, P₂ and P₃ for tickets 1, 2 and 3 respectively. Suppose that individual A is risk averse. What can we say about the absolute and relative values of P₁, P₂ and P₃? In what ways will the answer be different if the individual is risk neutral?

The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.