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Even with security guards, cameras, and the like, art theft from museums, although not common, does occur from time to time. Many famous examples of

Even with security guards, cameras, and the like, art theft from museums, although not common, does occur from time to time. Many famous examples of unrecovered pieces include Rembrandt's The Storm of the Sea of Galilee and van Gogh's Poppy Flowers. Suppose a small museum has in its collection paintings worth $1,600,000. It is estimated the museum has a two-percent chance of theft whereby art thieves make off with $700,000 worth of the paintings. A firm specializing in insurance for museum art offers an insurance policy costing $150,000 providing full compensation from the loss. The museum curator's utility function is U(A)=4A where A is the value of the paintings. Will the museum curator purchase the insurance policy

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