If there is no
uncertainty in society,

it is possible for the probability of being sick to equal
20% 

people will be willing to pay high premiums 

the expected income when sick will always equal $100 

the expected income when healthy will always equal $1
million 

the probabilities of being healthy or sick is either 100% or
zero % 
Which of the following
is true? With the assumption of riskaversion and FAIR insurance,
for a given probability of being sick and expected income,

utility with no insurance > utility from partial insurance
> utility from full insurance 

utility with no insurance > utility from partial insurance =
utility form full insurance 

utility with no insurance = utility from partial insurance =
utility form full insurance 

utility with no insurance < utility from partial insurance
> utility form full insurance 

utility with no insurance < utility from partial insurance
< utility from full insurance 
In 2018, Bannon's
Income when sick = I_{S} , income when healthy =
I_{H} , probability of being sick (p). The Expected Income
= E(I_{18})
In 2019, everything is
the same except income when healthy is greater than in 2018. It is
equal to: I_{H} + a
What will be the
difference between E(I_{19}) and E(I_{18}) ?