Janet’s broad attitude to risk (risk averse, risk neutral, or risk loving) is independent of her wealth. She has initial wealth ?w and is offered the opportunity to buy a lottery ticket. If she buys...

Janet’s broad attitude to risk (risk averse, risk neutral, or risk loving) is independent of her wealth. She has initial wealth ?w and is offered the opportunity to buy a lottery ticket. If she buys it, her final wealth will be either ?+4w+4 or ?−2w−2, each equally likely. She is indifferent between buying the ticket and not buying it. Janet offers her friend Sam (who has identical preferences and initial wealth) the following proposition: They buy the ticket together, and share the cost and proceeds equally.