1) Which of the following isnotby itself a good reason to buy insurance for an electronic gadget that you absolutely need for your daily life.

(assume that all statements are true)

a. I am much more likely than most people to break this thing. And so for me buying insurance maximizes expected value.

b. I cannot afford to buy a new one if it breaks.

c. If it breaks the insurance company will pay for a new one.

2) Which of the following is usually the bestreason to do something that doesn't maximize expected value?

a. I'm only in this situation once.

b. The worst case scenario, though unlikely, would ruin my life.

c. I don't feel like doing the math.

3) Which of the following is usually the bestreason to do something that doesn't maximize expected utility?

a. It's illegal.

b. No risk, no fun.

c. I don't feel like doing the math.

4) Imagine alotterywith 400 tickets. There are equal chances (100 tickets each) of winning zero, $10, $50, and $100. The tickets are being sold for $50 What is the expected value of buying a ticket? ______