James is a ration, risk-averse, and sophisticated investor. He had recently decided to get out of the liquor business and sold all his investments for $250,000. He had been looking at a new investment venture and was interested in the automotive industry. He has been evaluating two options of investment: 1) invest in SSS (information above) and 2) invest in Matthew Automotive Services (MAS). SSS conducts business in a very volatile environment with controversial business practices. On the other hand, MAS is located in the United States and is less subjected to the political and environmental factors that SSS encounters. The payoffs (net of the amount invested) for each firm depend on its next year's performance, as follows: Return SSS Next Year's Performance $150,000 $20,000 For each firm, James assesses prior probabilities of .4 for High and .6 for low for SSS. Occasionally, MAS assesses prior probabilities of .45 for high and .55 for low states. His utility for his investment return is equal to the squared