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Mary Is a Fervent Iowa State University Cyclone Basketball Fan

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Mary is a fervent Iowa State University Cyclone Basketball fan. She derives utility as a function of the ISU team winning the Big XII championship and from income according to the function
U(Ic, w) = 35 Ic + w, where Mary is a fervent Iowa State University Cyclone Basketball fan. She derives utility as a function of the ISU team winning the Big XII championship and from income according to the function U(I<sub>c</sub>, w) = 35 I<sub>c</sub> + w, where = { and w is her level of wealth. Mary believes the probability of a Cyclone championship is <sup>1</sup>/<sub>4</sub>. Mary has been offered the following insurance policy. The insurance policy costs $16. If the Cyclones win the championship, she pays only the policy cost of $16. If the Cyclones lose, she will receive $21.50 (so that after taking into account the policy cost of $16, her net return is $5.50). Will Mary's expected utility increase if she purchases the policy?
= { Mary is a fervent Iowa State University Cyclone Basketball fan. She derives utility as a function of the ISU team winning the Big XII championship and from income according to the function U(I<sub>c</sub>, w) = 35 I<sub>c</sub> + w, where = { and w is her level of wealth. Mary believes the probability of a Cyclone championship is <sup>1</sup>/<sub>4</sub>. Mary has been offered the following insurance policy. The insurance policy costs $16. If the Cyclones win the championship, she pays only the policy cost of $16. If the Cyclones lose, she will receive $21.50 (so that after taking into account the policy cost of $16, her net return is $5.50). Will Mary's expected utility increase if she purchases the policy?
and w is her level of wealth. Mary believes the probability of a Cyclone championship is 1/4. Mary has been offered the following "insurance policy." The insurance policy costs $16. If the Cyclones win the championship, she pays only the policy cost of $16. If the Cyclones lose, she will receive $21.50 (so that after taking into account the policy cost of $16, her net return is $5.50). Will Mary's expected utility increase if she purchases the policy?

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