1. Suppose that a decision maker’s risk attitude towards her level of wealth x is given by the utility functionU(x) =Her initial level of wealth is $15,000. If there is a 10% chance that one of the decision maker’s family heirlooms, valued at $5,000, will be stolen during the next year, what is the most that she would be willing to pay each year for an insurance policy that completely covers the potential loss of her cherished items?Round all answers (also intermediate answers to 2 decimals).
