ECONOMICS QUESTION HELP?

A

Alexander

New member
In deciding to park in an illegal place, any individual knows that the probability of getting a ticket is p and that the fine associated with receiving a ticket is f. Suppose that all individuals are risk averse,so that U''(W) < 0, where W is the individual’s wealth.Will a proportionate increase in the probability of being caught or a proportionate increase in the fine be a more effective deterrent to illegal parking?Use the Taylor series approximation: U(W-f) = U(W) - fU'(W) +((f^2)/2)U''(W)
 
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