Page 48 - 36-1

Ambiguity Increases and Insurance Deductibles

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Next, we prove that Condition (E4) holds for all , 1] and 0, ] through the , 1] and 0, ] through the
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Next, we prove that Condition (E4) holds for all
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following procedure. Let ng procedure. Let
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minimum, we obtain the determining conditions under which ≤ for all >0, <0, ≤ for all >0, <0,
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minimum, we obtain the determining conditions under which
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for all , 1] is equivalent to requiring , + ) ≤ 0 for 0< ≤ . , 1] is equivalent to requiring , + ) ≤ 0 for 0< ≤ .
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Since , )) is a local minimum when ) lies in 0, ], the condition , ) ≤ 0 , )) is a local minimum when ) lies in 0, ], the condition , ) ≤ 0
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for all , 1] is equivalent to requiring , 1)≤0. , 1] is equivalent to requiring , 1)≤0.
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all , 1] is equivalent to requiring , )) ≤ 0. , 1] is equivalent to requiring , )) ≤ 0.
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Since , )) is a local minimum when ) lies in , 1), the condition , ) ≤ 0 , )) is a local minimum when ) lies in , 1), the condition , ) ≤ 0
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Since
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for all , 1] is equivalent to requiring , + ) ≤ 0 and , 1)≤0, where 0< ≤ . , 1] is equivalent to requiring , + ) ≤ 0 and , 1)≤0, where 0< ≤ .
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Case 5. Case 5. ∗ ∗
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