Part E of Problem Set 5 Helpful Hint

The logic required for solving part E of Problem Set 5 is virtually identical to the logic behind the Coinsurance, Deductibles, and Upper Limits Spreadsheet spreadsheet (shown in class last Thursday); i.e., you need to determine: 1) the indemnity schedules under four alternative risk management strategies (i.e., self-insurance, full insurance, deductible insurance, and coinsurance), 2) state-contingent wealth associated with these strategies, and 3) state-contingent utilities and expected utility for these strategies.

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