1) Suppose incomes at sick-state and healthy-state become perfect substitutes and the probability to become sick is 0.3. Using a diagram, explain which insurance contract (full or partial) will maximize this client’s utility.

1) Suppose incomes at sick-state and healthy-state become perfect substitutes and the probability to become sick is 0.3. Using a diagram, explain which insurance contract (full or partial) will maximize this client’s utility.

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter7: The Market For Health Insurance

Section: Chapter Questions

Problem 11QAP

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