Note that there are no correct answers per sec.
Each student is asked to respond based on his or her subjectiveevaluation. No calculations are required.
Each problem has individual, team, and class components.
Problem 1: Preferences You are given a choice between beingawarded $1000 this time next year (with complete certainty), or areduced amount of dollars today. How much would you be willing tosettle for, in order to receive the award today?
Problem 2 Hypertension and the standard gamble Assume you sufferfrom severe hypertension that has led to blurry vision. If youcontinue to be treated with standard hypertension medications, youcan expect to live another 25 years, but your vision problems willpersist and become permanent. However, a new drug has come to themarket, which can restore your vision to a nearly normal, with thesame life expectancy of 25 years. However, the drug carries onecritical side effect –it leads to immediate death. Taking the newdrug is your personal choice. Would you agree to take this drug(which will cure your vision with certainty) if the chance ofimmediate death is given by one of the following probabilities:
A. 10% --- B. 25% --- C. 50% --- D. 75% --- E. 90%. ---
