Alice has standard utility function u(x1,x2)=(x1)^1/4(x2)^1/4 (a) What is her indirect utility function? Given prices p1=1 and

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Alice has standard utility function u(x1,x2)=(x1)^1/4(x2)^1/4 (a) What is her indirect utility function? Given prices p1=1 and p2=4, what is her utility of wealth function? What is her risk-attitude? (b) Alice faces an uncertain income: 36 with probability 1/3 and 81 with probability 2/3. What is her risk-premium in this situation? What is the maximal amount of money that is willing to pay for obtaining access to actuarially fair insurance?

Posted Date: Jun 12, 2024 11:08 PM

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Alice has standard utility function u(x1,x2)=(x1)^1/4(x2)^1/4 (a) What is her indirect utility function? Given prices p1=1 and

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