Deal or No Deal, cont. You are on Deal or No Deal again, and you are facing three boxes. One of the three contains $1,000,000, one contains $1000, and one contains $10. Now the dealer offers you $250,000 if you give up your right to open the boxes.

(a) Assuming that you use expected value as your guide in life, would you choose the sure amount or the right to open the boxes?

(b) Assuming that your utility function u(x)5!x, and that you use expected utility as your guide in life, would you choose the sure amount or the right to open the boxes?

(c) Given the utility function, what is the lowest amount in exchange for which you would give up your right to open the boxes?