Question

True or False - The decision maker, based on the utility function, would likely buy the $1 lottery ticket with a one in a thousand chance of winning $1,000,000.

A) True
B) False

Answer 1

The decision maker would likely buy the $1 lottery ticket with a one in a thousand chance of winning $1,000,000.

Step-by-step explanation:

Based on the information provided, the decision maker would likely buy the $1 lottery ticket with a one in a thousand chance of winning $1,000,000. This is because the decision maker makes choices based on their utility function, which measures the satisfaction or usefulness they derive from different outcomes.

Even though the probability of winning is low, the potential gain of $1,000,000 far outweighs the cost of the $1 ticket. Therefore, the statement is True.