Consider an individual with income w who is at risk of losing an amount of money D with probability. This individual has access to an insurance market: an unit of insurance costs q and pays 1 in the event of a loss. Define a as the amount of insurance that the individual buys. The individual's problem is to choose a. Define 2 as the consumption in the state where there is no loss and r2 as the consumption in the state where there is a loss. Assume that this individual has preferences under uncertainty that can be represented in the expected utility form, such that U(, ) = (1 - )u(x) + Tu(x). In addition, assume that the individual is strictly risk-averse, such that u" (.)