... probabilities: σ2 = (0.2)(125 - 80)2 + (0.3)(100 - 80)2 + (0.5)(50 - 80)2 = $ 975 . c. What would a risk-neutral person pay to play the lottery? A risk-neutral person would pay the expected ... .3(250,000 + (50,000 - 200,000)).5 = 519.13 + 94. 87 = 614. Expected utility with drought-resistant corn, again including your initial wealth: E(U) = .7( 250,000 + (500,000 - 250,000)).5 + ... wealth: E(U) = .7( 250,000 + (500,000 - 250,000)).5 + .3(250,000 + (350,000 - 250,000)).5 = 494. 975 + 177 .482 = 672 .46. You should choose the option with the highest expected utility, which...