Bill’s utility function takes the form U(= exp(where I is Bill’s income. Based on this utility function, we can see that Bill is:
A. risk averse
B. risk neutral
C. risk loving
D. He can exhibit two or more of these risk behaviors under this utility function.
Answer:C
Bill’s utility function takes the form U(= exp(where I is Bill’s income. Based on this utility function, we can see that Bill is:
A. risk averse B. risk neutral C. risk loving D. He can exhibit two or more of these risk behaviors under this utility function.