Consider a person with constant relative risk aversion $p$.
(a) Suppose the person has wealth of $100,000$ and faces a gamble in which he wins or loses $x$ with equal probabilities. Calculate the amount he would pay to avoid the gamble, for various values of p (say, between $0.5$ and $40$), and for some values of $x$. For large gambles, do large values of p seem reasonable? What about small gambles?
(b) Suppose $p > 1$ and the person has wealth $w$. Suppose he is offered a gamble in which he loses x or wins y with equal probabilities. Show that he will reject the gamble no matter how large $y$ is if $p >= (log(0.5)+log(1-x/w))/log(1-x/w)$.
I'm not sure where to start with this. Am I solving for the risk premium and multiplying by $w$?
I know that for someone with CRRA utility $u(w)= (1/(1-p))w^(1-p)$ and that an individual will pay $\pi(w)$ to avoid the gamble if $u((1-\pi)w)=E[u(1+\epsilon \tilde)w)]$. But I'm not sure how to apply this information to solve the question.