Should he buy the antivirus software

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Reference no: EM131089554

Jeff is a risk-neutral middle-aged American. The data on his computer is worth $2000. If his computer gets a virus, he will have to spend $600 to restore the data. Alternatively, he can purchase Norton Antivirus for $100.

a. If he believes there is a 50% chance that he will get a virus, should he buy the antivirus software?

b. Jeff’s neighbor is a psychic who specializes in knowing what will happen to computers. How much is Jeff willing to pay his neighbor to know if he will get a virus, if his neighbor is always correct?

c. How would your answer to part b change if his neighbor is only correct 90% of the time?

Reference no: EM131089554

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