There goin be a new challenge! And I hope it ain't zilch!
yay Zilch!
Best FC- Planet Karma.
Best AAA- {Midnight}
Best BF - Balloon Fever. First place in Intermediate division of Zap_Track and Spammy's 1st Tourney. ^_^ I'M A MOD YO
Here is a really easy problem to wrap your brain around to understand risk aversion and expected value.
I have a die, and we're gonna play a game. If it lands on 1, you get $1, 2, you get $2, and so on. How much would you pay to play this game assuming you are risk-averse (i.e. as most humans are)?
This isn't meant to be a trick question -- how much would you pay to play this game?
Now assume you're risk-neutral (meaning you are indifferent between a guaranteed payoff and an expected payoff of the same amount). How much should you be willing to pay to play?
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