June receives positive utility from being healthy. When exercise is part of Junes routine, she enjoys exercising. However, if exercising is not part of her routine, it is not enjoyable. Assume June lives for two periods, and her true utility is

(1,1)+(2,2)

where ct = 1 if she exercises in period t, and st = 1 if exercise is part of her routine. Furthermore, assume that if she exercises in a given period it becomes part of her routine, st = ct-1. Therefore, her utility can be rewritten as

(1,0)+(2,1)

The following table provides the necessary utilities:

u (1,1)	2
u (1,0)	-0.5
u (0,1)	-1
u (0,0)	0

a. Provide an explanation for why u(0,0) > u(0,1). b. If exercise is not originally part of her routine, c0 = 0, what will she choose to do

in each period? If June experiences projection bias, her utility is

(1, 0) + (2, 0) + (1 )(2, 1)

c. If June is fully projection biased, = 1, and exercise is not originally part of her routine, c0 = 0, what will she choose to do in each period?

d. If June is fully projection biased, = 1, does she act in her best interest?