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Good drivers have a 20% chance, and bad drivers have a 50% chance, of getting into an accident. A car is worth $900, and an accident would reduce its value to $400. Both types of drivers have utility U = (car value)0.5. What is a bad driver's expected utility without insurance?

  • 20.
  • 25.
  • 28.
  • 30.
  • None of the above.

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