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to $20,000. Utility 20 18 16 14 13.70 9 12- 10 8 6 4 2- 0 10 20 30 40 Suppose that Sara has

 

to $20,000. Utility 20 18 16 14 13.70 9 12- 10 8 6 4 2- 0 10 20 30 40 Suppose that Sara has an income of $80,000 but if her business burns down, her income drops 50 60 47.7 Sara's certainty equivalent is 70 80 Total utility 90 100 Income (1,000s of dollars)

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