Insurance Market: Anyone can purchase insurance for 1 point. If you are sick and become ill...

Insurance Market: Anyone can purchase insurance for 1 point. If you are sick and become ill you and you have insurance, you will be compensated 3 points. If you are healthy there is no benefit from insurance. You must pay the 1 point to purchase insurance even if you do not become ill.

Decision 1. You do not know your type. You can either be sick or healthy with a 50% chance of each. Each person chooses to either purchase insurance or not.

Decision 2. Here we will simulate the market if you did know if you are sick. To do this, you must make a choice for each type that you might be. You are either sick or healthy but you must make a choice in each case and only the choice which is your true type (which is randomly assigned as outlined below) is enforced. write your decision for the experiment with one decision for each type that you might be.

In summary, your discussion should look similar to the one below.

Decision 1: XXX

Decision 2: if sick YYY

If healthy ZZZ

Now, Where XXX, YYY, and ZZZ are your decisions to either buy or not buy insurance