Widget 15.4 Measures of a Lottery

Widget: Measures of a Lottery

Use the first two sliders to specify a person's risk preferences: $l \mu $l for decreasing sensitivity to gain and loss, and $l \lambda $l for loss aversion. Then specify the features of the lottery, including the possible loss, the possible gain, and the probability of the gain. The widget computes three values for the lottery: the monetary value, the utility value, and the certainty equivalent.

$l \mu $l =

$l \lambda $l =

loss =

gain =

p =

monetary value: m(Lottery) = $

monetary value: m(Lottery) = $

utility value: v(Lottery) =

utility value: v(Lottery) =

certainty equivalent: c(Lottery) = $

certainty equivalent: c(Lottery) = $

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