The potential costs for a project range between $100 million and $50 million. A project manager is indifferent between (a) the lottery ($100 mio with p=0.4 and $50 mio with p=0.6) and (b) a guaranteed project costs of $75 mio. What is the utility for a project costs of $75 mio and what is the project manager’s risk attitude (risk neutral, risk averse, or risk prone)?
a) Risk averse, u=0.6
b) none of the others
c) Risk prone, u=0.4
d) Risk neutral, u=0.5
e) Risk prone, u=0.6