Essay
Nick is considering buying a new bicycle.Here are his options:
Bike A- costs $100.It has a 60% chance of breaking down in the next year.Bike B- costs $200.It has a 20% chance of breaking down in the next year.
Bike C- costs $400.It has a 15% chance of breaking down in the next year.
Which bike should Nick purchase based on expected utility theory of repair costs?
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