1. Expected dollar return = 50% chances of winning full amount and 50% chances of losing full amount
= (50% of prize money) + (50% of 0)
= (0.5 * $1000000) + (0.5*0)
= $ 500000
2. When both the prizes offer the same return; then the person will choose the one which has less risk associated with. It is because people tend to be risk averse. Hence the person would choose the option 1.
3. As stated earlier the person is risk averter.
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