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Q1 Competitive insurance market under Symmetric information 8 Points Consumers in a competitive insurance market receive utility from wealth given by: U(W) = log(1+w) Wealth
Q1 Competitive insurance market under Symmetric information 8 Points Consumers in a competitive insurance market receive utility from wealth given by: 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 Th and for low-risk consumers, the probability of the bad state is TL where <. consumers obtain insurance policies from competitive companies. a policy specifies premium f that is paid to the company in good state and claim c consumer bad state. therefore with will receive: and: y="z-f" suppose that: parameter value th ti companies can perfectly observe types of consumers. q1.1 point find for x type h receive an contract market. round your answer at least three decimal places. enter here save q1.2 q1.3 q1.4 q1.5 l q1.6 q1.7 q1.8 q1 market under symmetric information points utility wealth given by: u log random without either units world or z there are two consumers: high-risk low-risk occurs probability tl where>
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