Is paul a risk avoider a risk taker or risk neutral? give, Ask an Expert

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Compute the utility for the pay off and give a summary.

Chez Paul is contemplating either opening another restaurant or expanding its existing location. The payoff table for these two decisions is:

	s1	s2	s3
New Restaurant	-$80K	$20K	$160K
Expand	-$40K	$20K	$100K

Paul has find outd the indifference likelihood for the lottery having a payoff of $160K with probability p and -$80K with possibility (1-p) as follows:

Amount	Indifference Probability(p)
-$40K	.4
$20K	.7
$100K	.9

Is Paul a risk avoider, a risk taker, or risk neutral? Give explanation.

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Statistics and Probability, Statistics

Category:- Statistics and Probability
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