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Weather reports indicate that there is a 50% chance of a drought this sum- mer. Mr. Roberts, a farmer, uses this information to decide

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Weather reports indicate that there is a 50% chance of a drought this sum- mer. Mr. Roberts, a farmer, uses this information to decide what he should grow on his field. He has a vNM utility function of the form u(w) = In(w) and his initial wealth is O. Mr. Robert can grow potatoes or soy. Here are the revenues he would get: Potatoes Soy Normal summer Drought 5 0008 20 000$ 40 0008 12 000$

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