Question: By spending $ 2 ( or , equivalently, by exerting effort that costs her $ 2 worth of psychic pain ) , Sally can reduce

By spending $2(or, equivalently, by exerting effort that costs her $2 worth of psychic pain), Sally can reduce the risk that a pickpocket steals $100 from her by 5%. By spending a total of $4, she can reduce the risk by a total of 8%. By spending a total of $6, she can reduce the risk by a total of 9%. She cannot reduce the risk any further.
By how much will Sally choose to reduce the risk?
By spending $2(or, equivalently, by exerting effort that costs her $2

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