1.   Advice on the contents of the exam and technical support

If you have questions about the contents of this paper, or you require technical       assistance, please contact our virtual invigilation team at the University of Glasgow Helpdeskhttps://www.gla.ac.uk/helpor on +44 (0)141 330 4800.

An academic member of staff will be available to answer questions about the          examination as they would normally at the beginning of the exam.  Technical          support will be available 24 hours per day. To ensure timely responses and that all students receive the same information, you should not contact academic staff

directly but instead use theHelpdesk.

2.   You are about to sit an online assessment

The standard duration of this exam is 1 hour.  Additional time of 30 minutes will be given to begin and complete this exam.  The additional time allows for downloading the paper and uploading your answers. If you are registered with the University’s     Disability Services, please refer to section 3.

3.   Time adjustments for students with disabilities

If you have in the past been granted adjustments to your exam time, e.g. through   the University’s Disability Service or at School or College, allowance has been made for you to complete this exam.

4.   Enlarging the text

If you need to enlarge the text of a PDF document: open Adobe Acrobat; click on the VIEW tab; click on ZOOM and then ZOOM TO; select the desired magnification level.

5.   Planning your time

When planning your time, you should allocate time to download the exam paper and to upload your answers to Moodle at the end of the exam.  For students instructed    to do so, you should allow time to submit your exam script on Turnitin within the

exam period.  Please report any technical difficulties experienced as soon as possible

viahttps://www.gla.ac.uk/help.

6.   Submitting your answers

Acceptable file types for submitting typed documents are: DOC/DOCX; RTF; PDF; XLS/XLSX.

Acceptable file types for submitting high resolution images are: JPG; PNG; TIF; PDF.

Please check that you have uploaded the CORRECT FILE, that it is readable and is the version that you want to be marked; if you use a word-processing package other than Word, you are advised to convert and upload as a pdf.

Lastly please ensure you upload files to the correct course Moodle assignment.

•   Submit (at least) one file per question. You may submit up to 20 files. Subquestions may be submitted in one file according to question.

•   Use the following naming convention: StudentID_CourseCode_QuestionNumber (e.g. 1234567_MGT1001_1). DO NOT include your name

•   This exam has been configured to allow submission of answers for two hours        beyond the scheduled exam time. Submissions made during this two-hour period will be treated as ‘late’ and will be graded ‘H’ .

7.   Declaration of Academic Integrity

The following information is very important – your degree may be at risk if you do not adhere to these instructions:

•   You must not communicate with any other person about these examination questions during the period in which you can submit your answers

•   You must follow any instructions on your examination paper regarding use of resources such as internet sources, books, notes or any other material that    would not normally be allowed in examinations on campus.

•   The work you submit must be entirely your own effort and must demonstrate your understanding rather than reproduce text from notes, slides, books, or   online sources (which is plagiarism)

•   You must not submit answers you have discussed with or copied from others, and you must not copy from notes you have prepared with or shared with      others.  If your answers are similar to those of any other candidate(s) you will both/all be suspected of collusion and referred to Student Conduct

•   This declaration incorporates the University’s Declaration of Originality which applies to all academic work (see below).

8.   Declaring that the work is your own

Before viewing the exam paper, you must check the box in the Exam Section on the Moodle Course page to agree to both this declaration and the University’s                 Declaration of Originality.

How to complete this exam:

•   Students should answer all parts of ONE question out of TWO.

•   Read the cover sheet carefully.

•   Read the exam student guidance on Moodle.

•   Please include your student ID, course code and the number of the question.

Question 1:

A)

Two inbivibusie )Dsii 才d9m I snb II( dsv9 toin才iy ind9Yi才9b 上 see9才e )Dsii 才d9m

A、a、D、snb 红(. Td9 u才iii才i9e sY9 3iv9n in 才d9 含oiiowin3 才sdi9. Td9y s3Y99b 才o 才d9 含oiiowin3  bivieion qYoD9buY9: 9sDd o含 才d9m Ddooe9e on9 odt9D才 in 才uYn、wi才d 才d9 含oiiowin3 oYb9Y: I → II → I → II. Hinb 才d9 eud3sm9-q9Y含9D才 9puiiidYium o含 才d9 Y9eui才in3 3sm9.

[33%]

B)

An individual’s u才iii才y-o含-w9si才d 含unD才ion ie U(w) = ln(w + 1) snb 才d9iY DuYY9n才 w9si才d ie  e. Ae s 含unD才ion o含 几、r、snb e dow muDd o含 才die w9si才d wiii 才d9 inbivibusi inv9e才 in s qYot9D才 才ds才 yi9ibe 过9Yo wi才d qYodsdiii才y 几、snb wi才d qYodsdiii才y 1 − 几 qsye rC boiisYe 才o sn

inv9e才oY wdo dse eun为 C boiisYe in才o 才d9 qYot9D才S

[33%]

C)

Rosie’s utility-o含-w9si才d 含unD才ion ie U(w) = 1 − 1/(w + 1). H9Y DuYY9n才 w9si才d ie t次00、 du才 wi才d qYodsdiii才y 0.次 sn sDDib9n才 wiii Y9buD9 d9Y w9si才d 才o t次己、se eummsYi过9b dy      Tsdi9 d9iow.

euqqoe9 才ds才 s boiisY o含 ineuYsnD9 Dov9Ys39 Doe才e S0 D9n才e.

s. Ie Hoei9 Yie为-sv9Ye9S

b. If possible, find a different insurance price such that it is more favourable to Rosie, but the insurance firm still maintains positive profits (make Rosie a better offer than you competitor). Prove that Rosie will be better-off by comparing her utility in both cases. Compare the insurance firm’s profits as well.

c. What is the minimum insurance price that an insurance firm will be willing to offer? Will it change if Rosie has a different utility function?

[33%]

Question 2:

A)

Four individuals (call them 1,2, 3 and 4) have jointly inherited 2 assets (call them

A, and B). The utilities are given in the following table. Identify all Pareto efficient ways to distribute these assets amount them.

[33%]

B)

An individual’s utility-of-wealth function is U(w) = √w and their current wealth is $1000.

With a probability of 0.25 there will be an accident reducing the individual’s wealth to $100. What is the maximum insurance price such that this individual still purchases full coverage?

[33%]

C)

Consider the following game. Jodi is the first player, choosing rows, and Ryan is the second player, choosing columns.