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Economics of Uncertainty (3.2) An individual owns assets of value Wo = 10, which may suffer a random loss (x) described by a discrete random

Economics of Uncertainty
(3.2) An individual owns assets of value Wo = 10, which may suffer a random loss (x) described by a discrete random variable: x p(x) 0 0.7 4 0.1 8 0.1 10 0.1 (a) Compute the premium associated to full insurance (assume the loading is zero everywhere in this exercise). (b) What is the actuarially fair premium when a deductible D = 3 is selected? What happens to the premium when D = 6? Why does the premium not fall by 50%

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