Tom Garvey, your boss, is the director of highway safety for the state. Tom has two main problems. One is that there is never enough money in the budget to implement all the schemes his office proposes. The second is that many of the schemes are experimental and it is unclear whether they will work at all. If they do work, it is unclear how many lives they will save.

Question

Tom is currently agonizing between two large schemes, either of which would use up the rest of his budget for the year. Project A is a conventional widening and improvement scheme that, based on past experience, is sure to save about 120 lives a year. Project B is to use an experimental new anti-skid surfacing material on some of the state's main roads. If the material turns out to be suitable for the climate, it should save 400 lives a year, but there is a real chance that it might be useless and save no lives at all. Expert opinion gives the new material a 50/50 chance of working.
Tom has thought long and hard about the two projects. He finds himself balanced between them. Saving 400 lives a year would be great, of course, but it seems so risky with a 50% chance of spending all that money and getting nothing. The safe 120 lives seem good compared to that.
Procedure
1. You realize that you have enough information here to construct a rough preference curve for Tom. Of the three possible outcomes, two are clear enough. Obviously Tom would rate 0 lives saved as "Worst" (0 points) and 400 lives saved as "Best" (100 points). But he rates Project A just as desirable as Project B, which is worth 50 points to him: (0.5 x 0) + (0.5 x 100) = 50 points. So, the 120 lives saved by Project A is also worth 50 points to Tom. So we have three points on Tom's preference curve:
0 lives saved 0 points
120 lives saved 50 points
400 lives saved 100 points