Requires large risk premium to compensate for bearing risk

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Assume there is uncertainty about the cost of disposing of the waste: there is a fifty-fifty chance that they will be $10,000 or $30,000.

How this uncertainty affects the cost-benefit calculation, if the government is risk neutral, or very risk averse (that it requires a large risk premium to compensate it for bearing risk)

Reference no: EM13889121

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