Consider three individuals whose futility functions are: U₁= wa (where 0 < a < 1), U₂ = log(w) and U₁ = log (w'). Let the three individuals' measures of absolute risk aversion be R₁, R2 and R3. Which of the following statements is correct? (a) R₁ R₂ R3 (b) R₁ R2 R3 (c) R3 > R₁ > R2 (d) R₁ < R₂ = R3 (e) R₂ > R₁ R3

Consider three individuals whose futility functions are: U₁= wa (where 0 < a < 1), U₂ = log(w) and U₁ = log (w'). Let the three individuals' measures of absolute risk aversion be R₁, R2 and R3. Which of the following statements is correct? (a) R₁ R₂ R3 (b) R₁ R2 R3 (c) R3 > R₁ > R2 (d) R₁ < R₂ = R3 (e) R₂ > R₁ R3

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.3P

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