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7. An individual has a Bernoulli utility function over wealth give by 15(2) = 1111(3) and she begins with wealth in. She faces a probability

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7. An individual has a Bernoulli utility function over wealth give by 15(2) = 1111(3) and she begins with wealth in. She faces a probability 1r of an earthquake knocking down her house causing damage D in wealth. She may purchase insurance which pays out iii if there is a loss [I] otherwise) and costs 0 :1 q

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