Unformatted text preview: ii. Calculate the expected value of the gamble. iii. Calculate the expected utility of the gamble. iv. Calculate the certainty equivalent of the gamble. v. Calculate the risk premium. vi. Draw on a diagram. Be accurate. 3. A tradeoﬀ between incentives and insurance is at the heart of the agency problem. Discuss 4. True, False, Uncertain, Explain. If agents actions (eﬀort) could be observed, then there is no agency problem. 5. “If a critical task is diﬃcult to measure, then all incentives should be weak”. Discuss 1...
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This note was uploaded on 02/16/2010 for the course ECOS Economics taught by Professor None during the One '09 term at University of Sydney.
- One '09