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You Want to Carry Insurance for Your Small Business

Question 10

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You want to carry insurance for your small business. The annual policy costs $1000 this year. If you are sued and you have no insurance, you will pay $5000. If you have insurance and are sued you pay nothing, and your partner gives you $500 for your wise foresight, so that the policy costs you only $500. Represent this game as a two-by-two matrix.

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