2. Three agents are characterized by the following utility functions: Al: u₁(x) = ln(x) A2: u₂(x) = 10x² A3: u₂(x)=2* +1 a) Calculate the expected rate of return and risk for the following assets: x₁ = (4,2 2,6/0,48 0,52) x₂ = (1,7 3,5/0,27 0,73) b) What asset will the agents with the previous utility functions choose?

2. Three agents are characterized by the following utility functions: Al: u₁(x) = ln(x) A2: u₂(x) = 10x² A3: u₂(x)=2* +1 a) Calculate the expected rate of return and risk for the following assets: x₁ = (4,2 2,6/0,48 0,52) x₂ = (1,7 3,5/0,27 0,73) b) What asset will the agents with the previous utility functions choose?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.10P

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