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Unformatted text preview: bed for a day. Should you get a vaccination? 4) Suppose you drive a used car that is in pretty bad shape. You have no comprehensive insurance, but are considering buying a special theft policy that would give you $1,000 (the replacement value) if the car were stolen. You judge the probability of losing your car to theft in any given year to be 1/200. If the insurance would cost you $10 per year, should you purchase it? 5) You work for an insurance firm and thus only care about making money. You offer a comprehensive package that costs $300 per year. You crunch the numbers on an applicant and figure that given genetics, habits, etc., she has a 2% chance of catching cancer in a given year, whose medical bills would average $6,000. She has a 1% likelihood of developing a heart condition, which would cost an average of $1,600. Finally, she has a 3% of some other disaster befalling her, and costing $4,500. Should you offer her the plan?...
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- Spring '10