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2. An individual has a vNM utility flmction over money of u(x) = x 2 , where x is her change in wealth. She can

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2. An individual has a vNM utility flmction over money of u(x) = x\" 2 , where x is her change in wealth. She can choose between the following lotteries. Which lottery will she choose? 0 Lottery 1: Receive $100 with a 20% probability. Receive $9 and $1 with unknown probabilities (but probabilities must sum to 1). - Lottery 2: Receive $16 with a 50% probability. Receive $4 with a 50% probability. She will always choose Lottery 1 She will always choose Lottery 2 She might choose Lottery 1 or Lottery 2, depending on the probabilities in Lottery 1. She will always be indifferent between the lotteries. P-PP'P

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