Billy Joe has utility of U = ln(C), while Bobby Sue has utility of U = C.

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Billy Joe has utility of U = ln(C), while Bobby Sue has utility of U = √C. Which person is more risk averse? Which person would pay the higher insurance premium to smooth consumption?

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Public Finance and Public Policy

ISBN: 978-1429278454

4th edition

Authors: Jonathan Gruber

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Question Posted: Apr 25, 2015 07:39 AM

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Billy Joe has utility of U = ln(C), while Bobby Sue has utility of U = C.

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It is not obvious from looking at the two utility functions which is more risk averse A nu...View the full answer

Public Finance and Public Policy

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