Your utility function is U = ln(2C) where C is the amount of consumption you have in
Question:
a. What is your expected utility?
b. Calculate an actuarially fair insurance premium. What would your expected utility be were you to purchase the actuarially fair insurance premium?
c. What is the most that you would be willing to pay for insurance, given your utility function?
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a Expected utility is the sum of the expected utility in each state Assuming consumption of your ent...View the full answer
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