Yuri owns just one ship. The ship is worth $200 million dollars. If the ship sinks, Yuri loses $200 million. The probability that it will sink is .02. Yuri's total wealth, including the value of the ship is $225 million. He is an expected utility maximizer with von Neuman Morgensten utility U(W) equal to the square root of W. What is the maximum amount that Yuri would be willing to pay in order to be fully insured against the risk of losing his ship

For example, the upper right cell shows that if expresso advertises and beantown doesn't advertise, expresso will make a profit of $15 million, and beantown will make a profit of $2 million. assume this is a simultaneous game and that expresso and beantown are both profit-maximizing firms. if expresso decides to advertise, it will earn a profit of $ million if beantown advertises and a profit of $ million if beantown does not advertise. if expresso decides not to advertise, it will earn a profit of $ million if beantown advertises and a profit of $ million if beantown does not advertise. if beantown advertises, expresso makes a higher profit if it chooses . if beantown doesn't advertise, expresso makes a higher profit if it chooses . suppose that both firms start off not advertising. if the firms act independently, what strategies will they end up choosing? expresso will choose to advertise and beantown will choose not to advertise. expresso will choose not to advertise and beantown will choose to advertise. both firms will choose to advertise. both firms will choose not to advertise.