What is her expected utility

Reference no: EM133219756

Question: Mrs. Obaatanpa has a wealth of GhC 3,500 for one year. There is a 35% probability that she will get sick and she estimates her loss from the illness to be GhC 1,600. Her utility function is given as U(Y) = VY, where Y is the amount of wealth she has. a) Comment on her utility function. Is she risk-neutral? Estimate the risk that she faces and explain. c) What is her expected utility? d) Suppose that she can buy an insurance policy that will cover the entire loss, what is the maximum premium she would be willing to pay?

Reference no: EM133219756

Questions Cloud

Describes the contents of the data set : Examine the raw data le SwineFlu2009.dat and read it into SAS and Print a report that describes the contents of the data set including attributes of the

Costs of teaching a commerce degree : How do you think the costs of teaching a commerce degree online would compare to the costs of a commerce degree taught on-campus at a university (i.e., face-to-

Does our christian belief system interact with our roles : Give me a brief answer to this: Does our Christian belief system interact with our roles in a team situation or does it even come into play

What are moral dilemmas : Differentiate between moral and non moral standards. Cite two differences between moral and non- moral standards.

What is her expected utility : What is her expected utility and Suppose that she can buy an insurance policy that will cover the entire loss, what is the maximum premium she would be willing

What is the future worth of 600 deposited : What is the future worth of 600 deposited at the end of every month for 4 years if the interest is 12% compounded quarterly.

Discuss the main opportunities in doing business : Discuss the main opportunities and challenges in doing business in Sub Sahara Africa? Why is sustainability always an issue for economies

Find the total discounted utility for player : Find the total discounted utility for player 2 if player 1 decides to play middle all the time and player 2 decides to play left all the time.

Who is the more reliable narrator and why : Who is the more reliable narrator and why? Which one seems more mature and why? List any other points of contrast that you found interesting.

User Account

All Pages