Here's two further graphs, which as well as showing utility measurement, also reflect very well a measure of stupidity (mine!).
Following David's comments on my "Thoughts on week 4", I revisited the graph producing exercise and produced these initially rather interesting graphs for comparison. However, on considering why they are so different and the graph for certainty equivalence so odd, it would appear that the certain answer is that I didn't read question 3 under the certainty equivalence measure properly (I answered it as if it read exactly the same as question1).
The utility value of this blog as a learning tool has just increased substantially...
Hi Fran, those graphs look more promising, but I note that the Probability Equivalence graph still only has four data points, rather than the five that should be expected. I can't work out why the points are joined up in the zig-zag way they are in the Certainty Equivalence graph. You'd expect the left hand portion of the curve to go from (0, 0) to (250, 0.25 - roughly?). Can you tell me the coordinates for the Certainty Equivalence graph - i.e. (monetary value, utility)? I'll try and plot it myself.
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