SAT, 01.01.2022 14:00 makayyafreeman

Clancy has $1,200. He plans to bet on a boxing match between Sullivan and Flanagan. For $4, he can buy a coupon that pays $10 if Sullivan wins and nothing otherwise. For $6 he can buy a coupon that will pay $10 if Flanagan wins and nothing otherwise. Clancy doesn’t agree with these odds. He thinks that the two fighters each have a probability of 1/2 of winning. If he is an expected utility maximizer who tries to maximize the expected value of lnW, where lnW is the natural log of his wealth, it would be rational for him to buy.

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Clancy has $1,200. He plans to bet on a boxing match between Sullivan and Flanagan. For $4, he can b...