1. Obtain the value of 0

1. Obtain the value of O < a < 1 that makes you indifferent between having 400 with probability one {400; 1}, and facing the risky prospect {100, 500: a, 1 - a}. If that value of a = - a}, then makes you indifferent between {400; 1) and {100, 500: a, 1 u(400) = a u(100) + (1 - a) u(500) = * + * u(100) (I-a) u(500) You just found the value of utility associated to the outcome of 400. u (400)