1 Adverse Selection Suppose the quality of a driver is characterized by a random variable x. A higher value of indicates a better driver and the probability of accident is lower. z is uniformly distributed between () and 1. Suppose the probability of having a traffic accident is 0.05 0.04x. For example, if a driver has x = (0.2, the probability of having a traffic accident is 0.05 0.04 x 0.2 = 0.042. If the traffic accident happens, the loss is 1000. All people have an intiail wealth of 1200. 1. Now we consider one single driver with x = 0.5, Q. Consider the risk-averse buyer with utility function u(w) = \\/w. Denote maximum willingness to pay for every unit of coverage for the insurance with full coverage as Wy, the maximum willingness to pay for every unit coverage for Insurance A as W, the maximum willingness to pay for every unit coverage for Insurance B as Wg. Rank Wiwn. Wa, Wy and explain