Oscar's preferences for consequences can be represented by a Bernoulli- Cramer utility function of the form u(y) = /, where y is his wealth. Suppose that there are two possible states of the world, a good state (G) and a bad state (B). The probability of the good state occurring is pg and the probability of the bad state occurring is 1 pg, where 0 0. If the bad state of the world occurs, then Oscar will have a wealth of yg, where 0