What is the expected value of the gamble?

Congratulations you are a contestant on the famous game show Deal Me In and Monty Bounty the g Show more Congratulations you are a contestant on the famous game show Deal Me In and Monty Bounty the genial host has selected you as a final contestant. You have a choice: you can take $64 in cash or you can gamble. If you decide to gamble there are three possible outcomes: door number one door number two and door number three. Behind one of the doors is a prize valued at $121 another door has a prize valued at $81 and one door has a prize worth $1. a) What is the expected value of the gamble? b) If you are risk neutral which option would you choose? c) Suppose your utility function is of the formU M;which option would you choose? d) Suppose your utility function is of the form U M. What is the smallest amount of money that Monty could offer you (with certainty) so that you would just be indifferent between the sure thing and the gamble? [Unless you are feeling ambitious just give the equation that must be solved]. Show less

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