Following [111, suppose car insurance companies believe that Ben drives very carefully. That is, e = 2. How does their belief about the probability Ben is a skilled driver [ B = 1) depend on Ben's number of accidents r? O a. skilled for sure if r g 1, skilled with probability V2 if r : 2, and unskilled for sure if r z 3. ('3 b. skilled for sure if r s 2, skilled with probability V2 if r : 3, and unskilled for sure if r : 4. O c. skilled for sure if r 5 2, and unskilled for sure if r 2 3 Q d. skilled for sure if r = 0, Skilled with prob 1;? if r = 'l, and unskilled for sure it r = 2. Clear my choice Following Q15, if Ben indeed drives very carefully (e = 2), what is Ben's expected payoff? O a. -0.5 O b. 1.5 O c. 3.5 O d. -4.5 Next pageFollowing Q15, what will happen if Ben drives normally (e = 1) instead of very carefully (e = 2)? O a. If Ben happens to be a skilled driver and & = 4, then insurance companies' belief will go down from q = 1 to q = 1/2 (r will go up from 1 to 2, and thus q goes down from 1/2 to 0) O b. If Ben happens to be a skilled driver and & = 3, then insurance companies' belief will not change. (r will go up from 0 to 1, and thus q goes down from 1 to 1/2) O c. If Ben happens to be an unskilled driver and & = 3, then insurance companies' belief will go down from q = 1/2 to q = 0 (r will go up from 1 to 2, and thus q goes down from 1/2 to 0) O d. If Ben happens to be an unskilled driver and & = 4, then insurance companies' belief will go down from q = 1/2 to q = 0 (r will go up from 2 to 3, and thus q is unchanged at 0)Following Q15, does Ben have an incentive to drive normally instead of very carefully? O a. Yes, because by driving normally instead of very carefully, Ben's payoff will go up by 0.5, given that the expected value ofq goes down by only 3/8 , while cost of effort goes down by 3.5. O b. No, because by driving normally instead of very carefully, Ben's payoff will go down by 4.5, given that the expected value of q goes down by 1, while cost of effort goes down by 3.5. O c. No, because driving normally instead of very carefully will increase Ben's frequency of accidents. 0 d. Yes, because driving normally costs less than driving very carefully. Following Q15, what can be an equilibrium behavior? O a. Ben will drive normally. O b. Ben will drive very carefully. O c. Ben will drive carelessly. O d. None of the above is possible equilibrium behavior.Following 015, suppose the car insurance companies are able to identify Ben's commuting route and also identify a big group of drivers who commute via the same route. Suppose all these drivers loolc ex ante the same as Ben. That is, the description we made about Ben applies to all these drivers. The data on the frequency of accidents for all these drivers gives the insurance companies better information about O a. Ben's driving Skill. 0 b. Both (a) and (b) O c. Neither (a) nor (b) Q d. The road condition of Ben's commuting route