Consumers in a competitive insurance market receive utility from wealth given by:

Q2 Competitive insurance market under asymmetric information 6 Points Consumers in a competitive insurance market receive utility from Searching for policy server. U(w) = log(1 + w) Wealth is random and consumers without insurance will receive either a units of wealth in the bad state of the world or z units of wealth in the good state. There are two types of insurance consumers: high-risk (Type A) and low-risk (Type L). For high-risk consumers, the bad state occurs with probability ah and for low-risk consumers, the probability of the bad state is al where al