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Consider an individual who adopts u(x) = - exp-0.0001x as the (expo- nential) utility function and makes decisions according to the expected utility criterion. Suppose

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Consider an individual who adopts u(x) = - exp-0.0001x as the (expo- nential) utility function and makes decisions according to the expected utility criterion. Suppose the individual buys insurance to cover a loss which has a compound Poisson distribution with parameter 1 = 2 and an individual claim size, which is constant at 5000. Find the maximum premium the individual will be prepared to pay

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