Question
solve and graph Now that Donald Trump is no longer president he is relooking at investing in a land deal in Moscow. He is risk
solve and graph Now that Donald Trump is no longer president he is relooking at investing in a land deal in Moscow. He is risk neutral and his utility function is () = where is income. He believes that there is a 80% chance that he will earn $100,000,000 and a 20% chance that he will earn $500,000,000. Trump can choose to put his money in a safe asset that guarantees him $200,000,000 for sure. Michael Cohen (even though he is in prison) is still the best expert on Russian issues and can tell President Trump for sure whether he will make the $500,000,000 on the land deal. Prior to Michael Cohen looking into the deal Trump believes that there is a 80% chance that he will report that the deal is not a good one. How much will he be willing to pay Michael Cohen to look into the deal so that he can have perfect information about whether the Moscow deal will give him the big payoff?
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