Solved: Draw a decision tree for don new combs problem, Managerial Economics

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Draw a decision tree for don new combs problem

Assignment:

Questions

1. Draw a decision tree for Don New comb's problem.

2. What is the significance of his statement that he would sell the business for 20 billion credits?

3. Suppose that Don's risk attitude can be modeled with an exponential utility function. If his certainty equivalent were 15 billion credits, find his risk tolerance. What would his risk tolerance be if his CE were 20 billion?

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Managerial Economics: Draw a decision tree for don new combs problem

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