A decision maker has the following utility function Payoff Indifference Probability 200 1.00 150 .95 50 .75 0 .60 -50 0 What is the risk premium for the payoff of 50? Solution EV = (.75*200) + (.25*-50) = 137.50 Risk Premium would be the 137.50 less the 50 = 87.50.