Question: Problem 3 (4 points) For the utility function u(x) = 1 +0.5(e-0.22 3e -0.52), determine the following for the lottery c = (5,0.4, 1). (i)

Problem 3 (4 points) For the utility function u(x) = 1

Problem 3 (4 points) For the utility function u(x) = 1 +0.5(e-0.22 3e -0.52), determine the following for the lottery c = (5,0.4, 1). (i) Expected consequence (7) (ii) Certainty equivalent (2) (iii) Risk premium (RP) (iv) Insurance premium (IP) (v) Is the utility function strategically equivalent to u(x) = 2 +6(e-0.27 3e-0.5x)? Why/Why not? Problem 3 (4 points) For the utility function u(x) = 1 +0.5(e-0.22 3e -0.52), determine the following for the lottery c = (5,0.4, 1). (i) Expected consequence (7) (ii) Certainty equivalent (2) (iii) Risk premium (RP) (iv) Insurance premium (IP) (v) Is the utility function strategically equivalent to u(x) = 2 +6(e-0.27 3e-0.5x)? Why/Why not

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