Transcribed Image Text:4. In class, we showed that if a risk adverse consumer was offered “fair” insurance (i.e. =), she
would fully insure against the risk. Show that if the insurance is not fair (i.e. <), the consumer
may still insure, but not fully against the risk.
would fully insure against the risk. Show that if the insurance is not fair (i.e. <), the consumer
may still insure, but not fully against the risk.
