Which of the Following Is True About an Individual's Choice

question 10

Multiple Choice

Which of the following is true about an individual's choice of insurance assuming state-independent tastes?

• A)Full insurance will be chosen from a full menu of actuarily fair insurance if tastes are risk averse.
• B)No insurance will be chosen if the menu of insurance contracts is actuarily unfair and tastes are risk averse.
• C)No insurance will be chosen if the menu of insurance contracts is actuarily unfair and tastes are risk-neutral.
• D)(a) and (b) are true.
• E)(a) and (c) are true.
• F)(b) and (c) are true.
• G)All of the above.
• H)None of the above

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Definitions:

Generalised Anxiety Disorder

Generalized anxiety disorder is characterized by persistent and excessive worry about various aspects of life, not tied to any specific object or situation.

Panic Disorder

A mental health condition characterized by sudden and repeated episodes of intense fear or discomfort, along with physical symptoms such as heart palpitations, chest pain, or shortness of breath.

Obsessive-Compulsive Disorder

A mental health disorder where individuals experience uncontrollable, recurring thoughts (obsessions) and behaviors (compulsions) they feel the urge to repeat repeatedly.

Generalised Anxiety Disorder

A mental health condition characterized by persistent and excessive worry about multiple aspects of life, beyond what might be considered reasonable.