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Billy Pigskin is a football player with a von Neumann-Morgenstern utility function U(c) = c 1/2....

Billy Pigskin is a football player with a von Neumann-Morgenstern utility function U(c) = c 1/2. If Billy is not injured this season, he will receive an income of $16 million. If he is injured, his income will be only $10,000. The probability that he will be injured is 0.1 and the probability that he will not be injured is 0.9. What is the certainty equivalent of the gamble that Billy is facing? (See the hint to problem 3.)

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3600 + 10 361o 130 32100 13032 100 )

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