A decision maker with a logarithmic M-curve and initial wealth $20 faces two mutually irrelevant deals. T. Deal I: Pays $—10 and $50 with equal chances. II. Deal 2: Pays $—5 and $100 with equal...

A decision maker with a logarithmic M-curve and initial wealth $20 faces two mutually irrelevant deals.

T. Deal I: Pays $—10 and $50 with equal chances.

II. Deal 2: Pays $—5 and $100 with equal chances.

a. What is his PIBP of Deal 1 ?

b. What is his PIBP of Deal 2?

c. What is his PIBP for the two deals?

d. If he buys Deal 1 at his PIBP, what is his PIBP for Deal 2?

e. If he buys Deal 1 at his PIBP, what is his PISP for Deal 1?