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Does behavioral economics or institutional economics present a more fundamental challenge to neoclassical economics? Explain

The amounts (in f100 units) for claims arriving at 5 insurance companies, in a particular hour, were as follows: Company Amounts Sum Sum of squares A 7.8, 11.6, 3.7, 5.2, 6.3 34.6 275.82 B 10.1, 12.7, 11.6, 14.7, 12.9, 18.3 80.3 1,115.25 C 8.6, 7.9, 15.2, 11.4 43.1 497.37 D 18.6, 17.6, 11.8, 9.2 57.2 879.6 E 16.3, 18.1, 19.8, 15.2,9.4 78.8 1,304.74 (i) Show that there are significant differences in the mean claim sizes between companies at the 1% level. [5] (ii) (a) Obtain estimates for the mean claim amounts for each company. (b) Analyse the companies' mean claim sizes using a least significant difference approach. [8 [Total 13]An annual premium with-profit 20-year endowment assurance policy, issued to a life aged exactly 40 has a basic sum assured of 10,000 payable at the end of the year of death. Premiums are calculated assuming AM92 Select mortality, 4% pa interest, initial expenses of $150 and claim related expenses of 3% of the base sum assured (payable on death or maturity). (i) Calculate the premium if the policy is assumed to provide simple bonuses of 2% of the sum assured vesting at the end of each policy year (ie the basic benefit amount will be increased by $200 at the end of each policy year for future claims). [6] (ii) Calculate the premium if the policy is assumed to provide compound bonuses of 4% pa of the sum assured vesting at the end of each policy year (ie the basic benefit amount will be increased by a factor of 1.04 at the end of each policy year for future claims). [5] [Total 1 1]