-Bob's utility function is shown in the above figure.He currently has $100 worth of property,but there is a 50% chance that all of it will be stolen.An insurance company offers to reimburse Bob for his loss if the money is stolen.What is the most that Bob would pay for such a policy? Explain.
Definitions:
Prisoner's Dilemma
A paradox in decision analysis in which two individuals acting in their own self-interest do not produce the optimal outcome.
Ingroup Bias
The tendency to favor members of one's own group over those from external groups.
Trust
The firm belief in the reliability, truth, ability, or strength of someone or something.
Cooperation
Working together toward a common goal or benefit.
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