Question
Caleb's utility of consumption is U(C) = C^0.47. His annual income is $64,824. Each year he faces probability 0.021 of catching a severe case of
Caleb's utility of consumption is U(C) = C^0.47. His annual income is $64,824. Each year he faces probability 0.021 of catching a severe case of COVID-19, which would cost him $44,000 in medical bills and lost wages. What is the maximum annual Risk Premium (the amount above the actuarially fair premium) that he would be willing to pay?
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Gapenskis Understanding Healthcare Financial Management
Authors: George H. Pink, Paula H. Song
8th Edition
1640551093, 978-1640551091
