Double Inflection Utility Function

[Samira152]

Reading 5: The Behavioral Finance Perspective
Page: 18, Volume: 2, 2016 Book
Chart: Friedman-Savage Double-Inflection Utility Function
I am confused with the example of Friedman and Savage, that discussed about an example of lottery ticket and flight insurance.
Can anyone help me answer how risk averse investors would pay a premium to avoid it and how risk seeking investors would pay a premium to undertake the gamble?

 

[cpk123]

risk averse investor would pay an INSURANCE premium to be protected - from the risk of the investment. (hence avoids risk).
A risky investor will buy the lottery ticket (pay the premium to buy the ticket) and enter into the risky gamble. (invites the risk by entering into the gamble).