Consider an individual who has a healthy state income of $10,000 and a sick state income of $2,000. The probability of illness is 30%. If the individual is going to be better off with an insurance contract, it must be that their expected income does not change the insurance contract is full there is not enough information their expected utility does not change

Consider an individual who has a healthy state income of $10,000 and a sick state income of $2,000. The probability of illness is 30%. If the individual is going to be better off with an insurance contract, it must be that their expected income does not change the insurance contract is full there is not enough information their expected utility does not change

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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