Question
Since the pandemic began, many airlines have lost money. Suppose that an airline company is about to go bankrupt. The President's Council of Economic Advisors
Since the pandemic began, many airlines have lost money. Suppose that an airline company is about to go bankrupt. The President's Council of Economic Advisors estimates that, if the government steps in to "rescue" this company, and if the rescue is successful, then the company will contribute approximately $6 billion to the US economy over the next 5 years (this is the total amount for all 5 years combined). If the rescue is unsuccessful, the company will soon go bankrupt (and will contribute $0 to the economy). The chance of successfully rescuing the company is estimated to be 1/3. The rescue "package" will cost $200 million each year for the next five years. If (and only if) the rescue is successful, the company will pay back $600 million of this cost (at the end of the five years). What is the expected utility over 5 years of attempting to rescue the airline?
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