Problem 1: Ann purchases insurance against damage to her phone wires at 45 cent a month, even though the probability that she incurs a repair (505". of $60 is only [1.4%. Is such behavior consistent with the rational behavior (it means, does it yield the highest payo for Ann between the two choices), given that Ann's utility function is a = , and a: _,- fill is her initial wealth? What if her wealth is w = Til? Suppose that Bolfs wealth is w = tit), and that his utility function is a = mi. Suppose that he also purchases the same insurance. Is his purchase of insurance consistent with the rational behavior? Compare your answer, assuming a: - t], with Ann's utility, and explain the difference