Answers
a) Setting ∏(y, θ) = 1, we get, γ = 0.375
b) Setting ∏(y, θ) = 1, we get, γ = 0.4375
c) Based on coefficient of risk aversion, the person in b) is more risk averse.
d) For a risk neutral person, coefficient of risk aversion = 1.
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