1. A homeowner wants to insure her house valued at V against theft. 'The chances of a theft occurring are p and known only to her. The insurance company is charging a premium of c for every rupee of insurance coverage purchased. If she buys, I amount of insurance and her expected payoff from this policy is (1 p) log (V- cl) + p log(IcI), what is the equilibrium amount of insurance purchased by her? If the chances of theft increase, will she buy more or less insurance?