Let there be a bet, B, such that the probability of winning x is p and the probability of winning y is 1-p. The bet is NOT necessarily fair.

5. Let there be a bet, B, such that the probability of winning x is p and the probability of winning y is 1-p. The bet is NOT necessarily fair. Show that if an individual is risk averse at all income levels then EU(taking the bet B) < u(I+EV(B)) i.e. a risk averse individual always prefers receiving the expected value of a bet that taking the bet itself.