Sophie has just graduated from university and she is considering whether to follow her own idea for a business and be an entrepreneur, or accept the job offer that she got from a local employer. If she starts her own venture, she may have large profits but also in case of bad market conditions she may face some loss. If she chooses to work in the firm that gave her a job offer, her income consists of a base wage and bonus and depending on market conditions her total income can increase or decrease. Her final payoff in case of good, average or bad market conditions for both her own venture and being an employee is provided in the table below.

	Entrepreneur	Employee
Good Market	$250,000	$70,000
Average Market	$15,000	$50,000
Bad Market	-$100,000	$30,000

h.) A few months later you hear that she accepted to work in the local firm instead of starting her own business. In her final agreement, her wage is settled to be $50,000 regardless of the market conditions, and she preferred this option to being an entrepreneur (So she has $50,000 without uncertainty). What would be her attitude towards risk? How would her utility function look like? Draw a utility function on a graph that would show the same pattern of behaviour under risk as hers.

For the following two parts, you dont need to show your detailed calculation for the values on tree, for part (i) you can directly transfer them from corresponding parts above. The problem parameters are as shown in the initial table for the question, the modification in part h (same wage in all conditions in the initial setup) do not apply. So her wage offer is as in the first table, not fixed at $50K.

For the following two parts, the job offer and payoffs are same as the table at the top of the question. The minor modification above for part h does not apply.

She has the chance to get better information on the state of the market before making her decision. There is an entrepreneurship support center at her university that provides market analysis at fairly low prices. The market analysis may provide two results: Positive or negative, each with 50% chance. If the analysis is positive, the probability of good market is 0.5 and average market is 0.45. If The analysis is negative, the probability of good market is 0.05 and average market is 0.25.

i. ) Draw a decision tree for Sophie's problem including the choice of market analysis, assuming market analysis is free.

j.) Market analysis was actually not free. Nevertheless She ended up choosing the market analysis. You later hear that she said even the price was triple of what I paid paid, I would still have bought the market analysis. What is the maximum value that the price of the market analysis can take, so that even the triple of that price would be profitable? What is the efficiency of the information provided by this analysis?(Efficiency: EVSI/EVPI)