If Chris cannot buy cold-summer insurance, what is her expected wealth and what is her expected utility?
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If Chris cannot buy cold-summer insurance, what is her expected wealth and what is her expected utility?
Chris’s wealth is $5,000 and it consists entirely of her share in a risky ice cream business. If the summer is cold, the business will fail, and she will have no wealth. Where Chris lives there is a 50 percent chance each year that the summer will be cold.
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