In the risky venture example, a decision maker with risk tolerance of $1.92 million does not prefer the more risky alternative, in spite of its dominating EMV. Now suppose everything stays the same...


In the risky venture example, a decision maker with risk tolerance of $1.92 million does not prefer the more risky alternative, in spite of its dominating EMV. Now suppose everything stays the same except for the best monetary outcome of the more risky alternative (the value in cell D14). How much larger must this value be for the decision maker to prefer the more risky alternative? What is the corresponding EMV at that point?



May 22, 2022
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