What is the risk premium that individual requires

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Consider an individual with a quadratic utility function (U(W) = 8*W2) and wealth of 10 euros. This individual is playing a complex game G, where with 50% chance her wealth decreases to 4 euros, 40% chance it stays the same at 10 euro, and 10% chance the wealth increases to 30 euros.

Problem 1: What is the risk premium that this individual requires?

Reference no: EM132818240

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