Suppose there are 125 risk-averse individuals, each with a $1 to invest in a project at t = 0. The project will yield $1 if liquidated at t = 1 and $2.20 if liquidated at t = 2. At t = 0, no individual knows what his type will be at t= 1. If he turns out to be type D, his utility function for consumption will be sqrt(C_1D) while if he turns out to be type L, his utility for consumption will be 0.6 sqrt(C_1L+C_2L ). It is known at t=0 that 40% of the individuals will be type D and 60% type Lat t = 1. Consider a bank owned mutually by these 125 depositors. The bank promises to pay $1.12 for withdrawals at t=1, and $2.20 for withdrawals at t=2. Suppose you are a type L depositor. You assume that all other depositors will withdraw at t = 2. Should you withdraw at t = 1 ort = 2? Ot=2 since the payoff is $0.219 higher than withdrawal at t = 1. Ot=2 since the payoff is $0.186 higher than withdrawal at t = 1. Ot=2 since the payoff is $0.165 higher than withdrawal at t = 1. Ot=1 since the payoff is $0.133 higher than withdrawal at t = 2.