Question: You have a utility function given by: U(W)=Ln(W), where W stands for wealth and Ln function represents the natural Logarithm. Assume your current wealth is

You have a utility function given by: U(W)=Ln(W), where W stands for wealth and Ln function represents the natural Logarithm. Assume your current wealth is $2,000. You are exposed to a gamble with 60% chances of gaining $700 and 40% of losing $300.

Suppose you take the gamble and lose. If you have the same offer of the insurance, will you buy it.

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