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Attached is the question Refer to the reading by Einav and Finkelstein: Adverse Selection: Theory and Empirics in Pictures. Take the case in which all

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Refer to the reading by Einav and Finkelstein: "Adverse Selection: Theory and Empirics in Pictures." Take the case in which all individuals are risk averse and where marginal costs slope down. Why might it be optimal (socially efficient) for insurance take-up to be less than 100%?

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