20. A college student has current wealth W, = 10 and is considering three career options. The first is to finish collegewhich costs an additional $5 in tuitionand become a mid-level back office worker, which will lead to total earnings of 20. The second option is to finish college (again, there is a tuition cost) and then get a job as a trader, which will lead to earnings of 30 with probability 50% and earnings of 10 with probability 50%. Finally, they might drop off from college and create a startup. The startup will give total income of $1000 if successful, which will happen with probability 10%. With probability 90%, there will be no income from the startup. The utility function over final wealth is w(W) = InW. Which career choice maximizes expected utility? (a) Back office. 10 (b) Trader. (c) Startup. (d) Indifferent between back office and trader. (e) Indifferent between back office and startup. Solution: a