The aim of this exercise was to show how much I am willing to gamble based on the amount of money that I would receive and the probability of actually getting that money.
The first graph shows the Certainty equivalence whereas the second graph shows Probability equivalence. In both graphs horizontal axis represents monetary values and the vertical axis represents utility values.
In both graphs there is a similar pattern, which shows that I am not a big gambler. I would prefer a certain amount of money rather than 50% chance of winning 1000 or 0. Furthermore, I would enter a lottery only when I would perceive a high probability of winning 1000, and only then I would be indifferent of the opportunity to have certain amount of money.
These graphs aren't correct. In each case you've forgotten to plot the monetary values of £0 and £1000 against their utilities of 0 and 1, respectively. Consequently, the scales on the axes are different in their range, so although the two curves look similar, in fact they are not. Also, for the certainty equivalence graph it looks like you haven't plotted the numbers in ascending order, with the result that the blue line appears to be doubling back on itself.
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