Jill has a utility for money given by u(x) = −e−x/10,000. Jill has just purchased a computer and can enroll in a one year insurance plan. Jill has $50,000 and would have to pay $600 dollars if the computer breaks. Based on her experience she believes that the chance that she breaks her computer is probability .02. What is her risk premium for the lottery involving her computer?

Answer rating: 100% (QA)

The probability that the computer will break is 002 and the probability that it wil... View the full answer