An art dealer owns a painting worth $1,600,000, and this dealer has an expected utility function with u(x) = x0.5,. There is a 10% chance that the painting will be damaged and only worth $350,000. What is the most that this dealer would be willing to %3D pay for full insurance? O 168,510 O 166,910 O 165,849 O 162,110

An art dealer owns a painting worth $1,600,000, and this dealer has an expected utility function with u(x) = x0.5,. There is a 10% chance that the painting will be damaged and only worth $350,000. What is the most that this dealer would be willing to %3D pay for full insurance? O 168,510 O 166,910 O 165,849 O 162,110

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.5P

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An art dealer owns a painting worth $1,600,000, and this dealer
has an expected utility function with u(x) = x°5, There is a 10%
chance that the painting will be damaged and only worth
$350,000. What is the most that this dealer would be willing to
%3!
pay for full insurance?
O 168,510
O 166,910
O 165,849
O 162,110

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