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Based on the model of Akerlof Market for Lemon, if you change the utility function of the buyer as following, does it fix the market
Based on the model of Akerlof Market for Lemon, if you change the utility function of the buyer as following, does it fix the market for Adverse Selection? The original utility function of buyer: UB=3/2Xj+M. In this case, buyers value products 50% more than sellers. The new utility function of buyer: U3=5/2X1+M. In this case, buyers value products 150% more than sellers. The utility function of seller is same as the original one: US=Xj+M Accordingly, if buyers' willingness to buy a product increases, does it prevent the market to fail due to adverse selection? Please give your answers in the context of the health care market. (Please remember that in the health care market, buyers are insurance companies, sellers are individuals seeking a health insurance policy, and the quality is health care costs with a uniform distribution). I kindly ask everyone to write a one-page long answer showing the change in expected level of the utility of buyers after buying a product and explaining buyers' corresponding behaviors for gaining utility
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