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Mathematics, 16.07.2019 22:30 orianabrown15

After graduating, sallie handshake’s best job offer will either be with a big-8 accounting firm for $160,000 a year or as a state farm agent in grand rapids, michigan, for $40,000 a year. she can increase the probability of the former outcome by studying more, but such studying has its costs. if s represents her amount of studying (where s = 0 is no study and s = 1 is all-out effort), her probability of getting the job with a big-8 firm just equals s. her utility depends on how hard she studies and her subsequent annual income y. she tries to maximize the expected value of the von neuman-morgenstern utility function u(s, y) = y1/2 − 400s2. if she chooses s to maximize her expected utility, how much will she study?

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