Contingencies A contract implemented only when a particular state of Nature occurs is state-contingent E.g. the insurer pays only if there is an accident
Contingencies A contract implemented only when a particular state of Nature occurs is state-contingent. E.g. the insurer pays only if there is an accident
Contingencies A state-contingent consumption plan is implemented only when a particular state of Nature occurs. E.g. take a vacation only if there is no accident
Contingencies A state-contingent consumption plan is implemented only when a particular state of Nature occurs. E.g. take a vacation only if there is no accident
State-Contingent Budget Constraints Each $1 of accident insurance costs y Consumer has sm of wealth. Cna is consumption value in the no- accident state c is consumption value in the accident state
State-Contingent Budget Constraints Each $1 of accident insurance costs . Consumer has $m of wealth. Cna is consumption value in the noaccident state. Ca is consumption value in the accident state
State-Contingent Budget Constraints
State-Contingent Budget Constraints Cna Ca
State-Contingent Budget Constraints A state-contingent consumption with $17 consumption value in the 20 accident state and $20 consumption value in the no-accident state 17
State-Contingent Budget Constraints Cna Ca 20 17 A state-contingent consumption with $17 consumption value in the accident state and $20 consumption value in the no-accident state