This is the homework on the Math of Risk and Risk Preference. While you might be able to grind through it without viewing the content in the previous post, my expectation is that you will have done so. It will greatly increase your understanding of what is going on.

Also, if you are an eager beaver in the crowd and do the homework before class next Monday (I applaud the eager beavers in the class) note that when you get to line 86 of the spreadsheet it says we have covered these ideas in class already. We should get to those ideas on Monday, if only briefly.

Anybody know what equation to use for problem 1 on the hmwk?

ReplyDeleteMake sure you are using cell references for values.

DeleteThanks, what's the equation for E(x)?

DeleteHave you reviewed the content at this post?

DeleteI'm having some difficulty with the homework. I believe I'm doing everything correct but I'm getting incorrect. I've tried changing my alias on the first sheet to other peoples to confirm, and my formulas with cell references are sometimes correct with other people's numbers. The utility function we're given is u(x) = x ^ a, where x1, x2 and a are given. Yet when I set the cell reference to =248^0.29 (my numbers), I get incorrect. For the E(x), it should be straightforward, probability of each event multiplied by each event's value, but this only works sometimes when I try other people's aliases. Even when that is correct, when I try to find the utility of the expected value, the utility expected function E(x) ^ a doesn't work, and I'm not getting it mixed up with the expected utility function where you sum the products of the utility of the event multiplied by its probability, as I've tried putting both of those different numbers in either of the two boxes to no avail. With one person's number set, when I tried to input the utility of the expectation of X with a correct E(x) I got 7.0998... and the value actually showed up on the graph lining up at 7.1, but even when this correct answer showed up on the graph, in the answer box it still gave me Incorrect.

ReplyDeleteCell reference means the letter and number combination, so something like =C21^F22. Are you doing that?

ReplyDeleteYes. I've had no problems with it in the prior homeworks.

Delete