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Risk-averse individual with a concave utility function

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Reference no: EM131312522

Assume Bubba is a risk-averse individual with a concave utility function. He has an 60% chance of being healthy and earning an income of $250,000. He has a 40% chance of being sick and having his income fall to $10,000. His utility is defined by:

U= income

What is his risk premium?

Reference no: EM131312522

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