Smith must choose between the following two canonical lotteries: l1 = {(0. c1),(0.3, c2),(0.4, c3),(0. c5)}, l2 = {(0. c1),(0.45, c3),(0.3, c4)}.

Published by admin at July 28, 2023

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Mr. Smith must choose between the following two canonical lotteries:

l1 = {(0.2 : c1),(0.3, c2),(0.4, c3),(0.1 : c5)},

l2 = {(0.25 : c1),(0.45, c3),(0.3, c4)}.

After due consideration Simth has expressed his preferences for consequences by the following assertion:

c1 > c2 > c3 > c4 > c5,

c3 ∼ {(0.6 : c1),(0.4 : c5)},

c2 ∼ {(0.75 : c1),(0.25 : c3)},

c4 ∼ {(0.5 : c3),(0.5 : c5)}.

The subscript 3 in the last two of these statements is not a misprint. Which of the two lotteries should Smith choose?