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Homework answers / question archive / Suppose is a preference over lotteries of two prizes 21, 22 that satisfies the A2 axiom (substitution)

Suppose is a preference over lotteries of two prizes 21, 22 that satisfies the A2 axiom (substitution)

Economics

Suppose is a preference over lotteries of two prizes 21, 22 that satisfies the A2 axiom (substitution). Suppose we are given that 21 > 22. Show that the lottery [(21;0.9), (22,0.1)] is strictly preferred to the lottery [(21;0.7), (22,0.3)] by breaking the lotteries into compound lotteries with a common lottery on the left branch and different pure prizes on the right branch.

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