Abstract
These three caselets provide practice using risk preference and utility, with both exponential utility (constant risk aversion) and logarithmic utility (decreasing risk aversion). The second caselet is an extension of Integrated Siting Systems, Inc. (UVA-QA-0441). Students may use TreePlan to conduct a sensitivity analysis of risk tolerance, and can employ Solver to find optimal risk sharing. Students will learn concepts and garner insights regarding portfolio risk in making investments, how intangibles can affect evaluation of risk, and how expected utility can exploit risk sharing.
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