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Four different jobs, listed below, have different levels of risk and are paid differently (as seen by the differences in wage). Job Risk (r) Wage
Four different jobs, listed below, have different levels of risk and are paid differently (as seen by the differences in wage).
Job | Risk (r) | Wage (w) |
A | 0.33 | $9.9 |
B | 0.4 | $21.8 |
C | 0.55 | $22.4 |
D | 0.66 | $22.7 |
Suppose that all workers have equal productivity. Consider a worker with the following utility function based on risk (r) and wage (w).
u(w,r)=w+1r2
This worker would work at the job in which she receives the highest utility. What is the highest utility that she can receive if these are the only four jobs available for her to choose from?
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