Question: Problem 3: (30 marks) A. Why is it essential to take into account the risk dimension when studying how agents take their decisions? (5 marks)

Problem 3: (30 marks) A. Why is it essential to take into account the risk dimension when studying how agents take their decisions? (5 marks) B. Consider the following utility functions (defined over the agent's wealth) (1) U(Y) = -= (2) U(Y) = In (Y) (3) U( Y ) = -Y-Y (4) U(Y) = aY - BY2 a) Check that these four utility functions are well-behaved (U' > 0, U"

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