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For this question, we are going to consider employer-sponsored insurance with two types of people (frail and robust) who work for the same employer. In

  1. For this question, we are going to consider employer-sponsored insurance with two types of people (frail and robust) who work for the same employer. In a Rothschild-Stiglitz model, frail customers are more likely to get sick and more interested in high levels of insurance. Both types of people are risk-averse in income and have a utility that is a function of wealth:

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