Question: Suppose that a decision maker has the following utility function:
U(x) = -0.000156x2 + 0.028125x - 0.265625
Use this utility function to calculate risk premiums for the gambles shown in Tables 14.3 and 14.4; create a similar table but based on this quadratic utility function. How would you classify the risk attitude of a decision maker with this utility function? Does such a risk attitude seem reasonable to you?