Kyle is an English PhD student; there is some chance he will get a prestigious university job that will pay him $80,000/year (probability p). If he does not get this job, he will have to take a job at Starbuck's, paying $25,000/year (probability (1 p)). Kyle's utility function over salary is given by
p
w, where w is the amount of his salary. Before Kyle has a chance to nish his PhD, he is oered a job at Dunder Miin paying $60,000/year.
How low does p have to be before Kyle is better o taking the Dunder Miin job?
(hint: p is some number between 0 and 1. For example, p = :25 means there is a 25% chance of Kyle getting
the university job and a 75% chance of his working at Starbuck's.)