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In the past few years, the traffic problems in Lynn McKell's hometown have gotten worse. Now, Broad Street is congested about half the time. The normal travel time to work for Lynn is only 15 minutes when she takes Broad Street and there is no congestion. With congestion, however, it takes Lynn 40 minutes to get to work using Broad Street. If Lynn decides to take the expressway, it takes 30 minutes, regardless of the traffic conditions. Lynn's utility for travel time is U115 minutes2 = 0.9, U130 minutes2 = 0.7, and U140 minutes2 = 0.2.
(a) Which route will minimize Lynn's expected travel time?
(b) Which route will maximize Lynn's utility?
(c) When it comes to travel time, is Lynn a risk seeker or a risk avoider? Justify your answer.
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