(Solution Library) Calculate the following gamble: you currently have $200, your utility-of-wealth function is u(w)=√w , and there is a 2/3 chance of losing


Question: Calculate the following gamble: you currently have $200, your utility-of-wealth function is \(u\left( w \right)=\sqrt{w}\) , and there is a \(\frac{2}{3}\) chance of losing $100, a \(\frac{1}{3}\) chance of gaining $200. Calculate the certainty equivalent.

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