Problem Set #3 Helpful Hint

As you work on solving Problem Set 3, I recommend reviewing the “Insurance and the Expected Utility Rule” section (pp. 29-32) of the September 10th assigned reading entitled Basic Economics: How Individuals Deal with Risk (Doherty, Chapter 2).   Problem Set 3 is based on the numerical example provided there, and tasks you with analyzing that particular numerical example using different utility functions.

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