題組內容

四、Both Gigi and Helen maximize the expected utility, with a (Bernoulli) utility function $u(x) = \ln x$, wherex is the amount of money they can enjoy. Each of them has an initial wealth $10, but may suffer from an accident that occurs with probability 1/4.

2. _________(4%) Suppose that the accident inflicts a damage $2 to each of the two girls. Can Gigi and Helen make an arrangement of mutual insurance that would constitute Pareto improvement over the case of no insurance? If yes, how; and if no, why not?