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There are two states of nature (S1, S2) with equal probabilities. Suppose there is a representative agent who is endowed with 1 unit of

There are two states of nature (S1, S2) with equal probabilities. Suppose there is a representative agent who is endowed with 1 unit of consumption today, and (2, 1) tomorrow. The agent has quadratic utility u(c) (c-3)2, c

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