Risk-averse von neumann-morgenstern perticular

Reference no: EM1331479

A risk adverse agent

In state of nature 1 the individual has income w, whereas in state of nature 2 the individual's income is y < w. The probabilities that these states will occur are (1 - p) and p, respectively. The individual can purchase insurance before the state of nature is known; an increase in income of s in state 2 can be purchased by a reduction in income of ∏s in state 1. Prove that a risk-averse von Neumann-Morgenstern individual will over-insure, fully-insure, or under-insure according as the insurance is available at a price ∏ lower than, equal to, or higher than the actuarially fair price.

Reference no: EM1331479

Questions Cloud

Nash equilibria : Consider the two-period repeated game in which this stage game is played twice and the repeated-game payos are simply the sum of the payos in each of the two periods.

Summary of the extrinsic and intrinsic rewards : A summary of the extrinsic and intrinsic rewards received by the Human Resource Director - What characteristics of the Human Resource Director that aren't expected to be part of the job.

Explaining unemployment benefits : Mr. Jones' only recourse is to file for unemployment benefits.

Write down a simple c++ cash register program : The program must ask for the customer's first name and last name initials. Use 2 different variables, one for the first name and one for the last name.

Risk-averse von neumann-morgenstern perticular : Prove that a risk-averse von Neumann-Morgenstern perticular will over-insure, fully-insure, or under-insure according as the insurance is available

Resources for marketing principles : Resources for Marketing Principles - Summarize information from your online resources and write a summary journal entry for each.

How to create a coke machine program in c++ : We would start by having the users insert their money. Since they can not physically insert the money, we will just ask them how much they wish to insert and we will keep track of how much money they have inserted.

Training and management development activities : What kinds of training and management development activities have you experienced that have benefited your career and Where do you seeing training and development going in the future within your organization

Explain e-business ethics and regulations affecting consumer : Would like to understand why these issues are any different in e-business as they would be in a brick and mortar business.

User Account

All Pages