Jack has a utility function u(w) = √w, Jill has a utility function v(w) = ln(w). Who is morerisk-averse?
Question
Solution 1
To determine who is more risk-averse, we need to look at the second derivative of their utility functions. The more negative the second derivative, the more risk-averse the individual.
For Jack, his utility function is u(w) = √w. The first derivative of this function is u'(w) = 1/(2√w), and the sec Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study prob
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