/
Login with Facebook Login with Google Join Free Login
» Insurance » house=250K; earthquake insurance=25k, they pay 250K if
memberPosted by Michael G 5 views.

house=250K; earthquake insurance=25k, they pay 250K if earthquake; probability=10%; U(I)=I^.5. buy i


house=250K
earthquake insurance=25k, they pay 250K if earthquake;
probability of quake=10%

Utility(U) that Smith gets from income (I) is given as following:
U(I)=I^0.5.

buy insurance?
[]yes
[]no
[]smith is indifferent
[]we need more info
Like . Bookmark . Follow . Report / Delete . Tags : Insurance . .
Add your Comments :
Name (Optional):
Email (Optional):
Choose any Password :
Numbers :
Share on : Facebook . Twitter . Google+ . Bookmark & Share . Gmail . Email

1 Comments :

member1 by LemonDemon 8 years ago.
No, for this reason. Right this as your reason, I am a mathmatical student, and the reason is that to warrant the insurance of 25k, there has to be 3 earthquakes, and there is a 0.01% chance of happening, which is neglegible. For this reason, the answer is NO.

Best answer please - spending my free time doing this.
Like . Report / Delete .   Share
Tags : House*(2232), 250k*(14), Earthquake*(30), Insurance*(40306), 25k*(17), Pay*(7426), Probability*(21), 10*(915), Buy*(5041)

Similar :


1 by Michael G. 1 reply. 5 views.
1 Comment
.
your comments...

2 by Michael G. 1 reply. 5 views.
1 Comment
.
your comments...

3 by Michael G. 1 reply. 5 views.
1 Comment
.
your comments...

4 by Michael G. 1 reply. 5 views.
1 Comment
.
your comments...

5 by Michael G. 1 reply. 5 views.
1 Comment
.
your comments...

6 by Michael G. 1 reply. 5 views.
1 Comment
.
your comments...

7 by Michael G. 1 reply. 5 views.
1 Comment
.
your comments...

8 by Michael G. 1 reply. 5 views.
1 Comment
.
your comments...

9 by Michael G. 1 reply. 5 views.
1 Comment
.
your comments...

10 by Michael G. 1 reply. 5 views.
1 Comment
.
your comments...
Login with Facebook Login with Google Join Free Login
Top