// LabRiskSpecs.txt. 11/6/2020. import Foundation class LabInsuranceSpecs { let strFairBetSpecs :String = """ `` Lab Specs // Type of lab Fair Bets // 0: Insurance or Fair Bet // Risk aversion Relative // 1:Absolute, Relative, or Both -0.9 1.0 .10 .90 // 2: Risk aversion specs // Slider label prefixes and specs Initial_Wealth=$ // 3: Initial wealth prefix 10000.00 20000.00 1000.00 10000.00 // 4: Initial wealth specs Winning_Payoff=$ // 5: Potential gain/loss prefix 1000.00 20000.00 1000.00 15000.00 // 6: Potential gain/loss specs Prob_of_Winning= // 7: Probability of gain/loss prefix 0.0 1.0 .1 .4 // 8: Probability of good/bad specs Price_of_Lottery_Ticket=$ // 9: "Price" of premium/bet ticket prefix 1000.00 10000.00 1000.00 8000.00 // 10: Lottery ticket price specs // Results labels Exp_Payoff=$ // 11: Expected gain/loss Ticket Exp_Wealth Exp_Utility // 12: Summary header Don't_Buy Buy // 13: Summary result column Lottery_Firm_Exp_Profit=$ // 14: Profit prefix // Graph specs Wealth_(1,000s) Utility // 15: Axis names 1000 // 16: Wealth axis scale `` Prob Specs ` Problem 0 Start Screen 1 - Lotteries and Fair Bets // 0: Title // Initial slider values: : RiskAversion, InitialWealth, PotentialGainLossWealth // ProbGainLoss, PriceLotteryPremium _ _ _ _ _ // 1. _ represents defaults // Slider visibility: RiskAversion, InitialWealth, PotentialGainLossWealth // ProbGainLoss, PriceLotteryPremium N N L L B // 2: Both, Label only, Scrollbar only, None // Table visibility: Wealth column, Utility column F F // 3: True, False // Graph visibility F // 4: True, False ` Text Start // 5: Text `RED`BLDObjective:`BLD Calculate the price of the lottery ticket if buying a lottery ticket is a fair bet.`BLK `BLDSetting the Stage:`BLD `0x2022 Winning payoff = $15,000. `0x2022 Probability of winning = .4. `BLDDefinition:`BLD A bet is fair if its expected dollar winnings equal zero. `BLDQuestion:`BLD Initially, the price of a ticket is $8,000. Does this represent a fair bet? Explain. `BLDQuestion:`BLD What is the lottery ticket price that would result in a fair bet; that is, what is the fair ticket price? Explain. Adjust the scrollbar to the upper right to confirm your answer. That is, use the scrollbar to find the lottery ticket price that results in a fair bet. ` Prob End ` Problem 1 Start Screen 2 - Fair Bets: Risk Averters // 0: Title // Initial slider values: : RiskAversion, InitialWealth, PotentialGainLossWealth // ProbGainLoss, PriceLotteryPremium _ _ _ _ 6000 // 1. _ represents defaults // Slider visibility: RiskAversion, InitialWealth, PotentialGainLossWealth // ProbGainLoss, PriceLotteryPremium L N L L L // 2: Both, Label only, Scrollbar only, None // Table visibility: Wealth column, Utility column T T // 3: True, False // Graph visibility T // 4: True, False ` Text Start // 5: Text `RED`BLDObjective:`BLD Determine if individuals would accept or reject a fair bet if they were risk averters.`BLK `BLDQuestion:`BLD Why is a lottery ticket a fair bet when its price equals $6,000? `BLDQuestion:`BLD Note that the relative risk aversion rate equals .90. Is the individual a risk averter or a risk taker? `BLDQuestion:`BLD If the individual DOES NOT buy a ticket, what is the (expected) value of `0x2022 wealth? `0x2022 utility? `BLDQuestion:`BLD If the individual DOES buy a ticket, what is the expected value of `0x2022 wealth? `0x2022 utility? `BLDQuestion:`BLD Would the individual buy a lottery ticket at the fair price? Explain. `BLDQuestion:`BLD In making the decision what is the critical factor: The expected value of `0x2022 wealth? or `0x2022 utility? `BLDQuestion:`BLD In general, would a risk averter accept a fair bet? ` Prob End ` Problem 2 Start Screen 3 - Fair Bets: Risk Takers // 0: Title // Initial slider values: : RiskAversion, InitialWealth, PotentialGainLossWealth // ProbGainLoss, PriceLotteryPremium _ _ _ _ 6000 // 1. _ represents defaults // Slider visibility: RiskAversion, InitialWealth, PotentialGainLossWealth // ProbGainLoss, PriceLotteryPremium B L L L L // 2: Both, Label only, Scrollbar only, None // Table visibility: Wealth column, Utility column T T // 3: True, False // Graph visibility T // 4: True, False ` Text Start // 5: Text `RED`BLDObjective:`BLD Determine if individuals would accept or reject a fair bet if they were risk takers.`BLK Using the relative risk aversion scrollbar appearing in the upper left corner of the window, decrease the rate to -0.90. `BLDQuestion:`BLD Is this individual a risk averter or a risk taker? `BLDQuestion:`BLD Would the individual buy a lottery ticket at the fair price? Explain. In general, would a risk taker accept a fair bet? ` Prob End """ let strInsuranceSpecs :String = """ `` Lab Specs // Type of lab Insurance // 0: Insurance or Bet // Risk aversion Relative // 1:Absolute, Relative, or Both 0.0 1.0 .10 .90 // 2: Risk aversion specs //Absolute // 1:Absolute, Relative, or Both //0.0 .0010 .0001 .0009 // 2: Risk aversion specs // Slider label prefixes and specs Initial_Wealth=$ // 3: Initial wealth prefix 10000.00 20000.00 1000.00 16000.00 // 4: Initial wealth specs Potential_Loss=$ // 5: Potential gain/loss prefix 1000.00 15000.00 1000.00 10000.00 // 6: Potential gain/loss specs Prob_Of_Loss= // 7: Probability of gain/loss prefix 0.0 1.0 .1 .4 // 8: Probability of good/bad specs Insurance_Premium=$ // 9: "Price" of premium/bet ticket prefix 1000.00 16000.00 500.00 8000.00 // 10: Premium specs // Results labels Exp_Loss=$ // 11: Expected gain/loss Insurance Exp_Wealth Exp_Utility // 12: Summary header Don't_Buy Buy // 13: Summary result column Insurance_Firm_Exp_Profit=$ // 14: Profit prefix // Graph specs Wealth_(1,000s) Utility // 15: Axis names 1000 // 16: Wealth axis scale `` Prob Specs ` Problem 0 Start Screen 1 - Risk Averters and Fair Insurance Premiums // 0: Title // Initial slider values: : RiskAversion, InitialWealth, PotentialGainLossWealth // ProbGainLoss, PriceLotteryPremium _ _ _ _ _ // 1. _ represents defaults // Slider visibility: RiskAversion, InitialWealth, PotentialGainLossWealth // ProbGainLoss, PriceLotteryPremium N N L L B // 2: Both, Label only, Scrollbar only, None // Table visibility: Wealth column, Utility column F F // 3: True, False // Graph visibility F // 4: True, False ` Text Start // 5: Text `RED`BLDObjective:`BLD Calculate the fair premium of an insurance policy.`BLK `BLDSetting the Stage:`BLD `0x2022 Potential Loss = $4,000.00 `0x2022 Probability of Loss = .4 `BLDDefinition:`BLD The fair premium is the premium at which the insurance firm's expected profit equals zero. `BLDQuestion:`BLD What is the expected dollar cost of the policy to the insurance firm? `BLDQuestion:`BLD What is the fair premium? Explain. Adjust the scrollbar to the upper right to confirm your answers. That is, use the scrollbar to confirm your fair premium calculation. ` Prob End ` Problem 1 Start Screen 2 - Risk Averters and Fair Insurance Premiums // 0: Title // Initial slider values: : RiskAversion, InitialWealth, PotentialGainLossWealth // ProbGainLoss, PriceLotteryPremium _ _ _ _ 4000 // 1. _ represents defaults // Slider visibility: RiskAversion, InitialWealth, PotentialGainLossWealth // ProbGainLoss, PriceLotteryPremium L L L L L // 2: Both, Label only, Scrollbar only, None // Table visibility: Wealth column, Utility column T T // 3: True, False // Graph visibility T // 4: True, False ` Text Start // 5: Text `RED`BLDObjective:`BLD Determine if a risk averter would purchase an insurance policy at the fair premium.`BLK `BLDQuestion:`BLD Note that the relative risk aversion rate equals .90. Is the individual a risk averter or a risk taker? `BLDQuestion:`BLD If the individual DOES NOT buy insurance, what is the expected value of `0x2022 wealth? `0x2022 utility? `BLDQuestion:`BLD If the individual DOES buy insurance, what is the (expected) value of `0x2022 wealth? `0x2022 utility? `BLDQuestion:`BLD Would the individual buy the insurance policy at the fair premium? Explain why or why not. `BLDQuestion:`BLD In making the decision what is the critical factor: The expected value of `0x2022 wealth? or `0x2022 utility? `BLDQuestion:`BLD In general, would a risk averter buy the insurance policy at the fair premium? Explain. ` Prob End ` Problem 2 Start Screen 3 - Range of Premiums Acceptable to Both Parties // 0: Title // Initial slider values: : RiskAversion, InitialWealth, PotentialGainLossWealth // ProbGainLoss, PriceLotteryPremium _ _ _ _ 4000 // 1. _ represents defaults // Slider visibility: RiskAversion, InitialWealth, PotentialGainLossWealth // ProbGainLoss, PriceLotteryPremium L L L L B // 2: Both, Label only, Scrollbar only, None // Table visibility: Wealth column, Utility column T T // 3: True, False // Graph visibility T // 4: True, False ` Text Start // 5: Text `RED`BLDObjective:`BLD Illustrate the range of premiums that would be mutually beneficial for both the insurance firm and the individual buyer.`BLK `BLDQuestion:`BLD What is the lowest premium below which the insurance firm would have a disincentive to sell the policy? Explain. `BLDQuestion:`BLD What is the highest premium above which the individual would have a disincentive to buy the policy? Explain. `BLDQuestion:`BLD What is the range of mutually beneficial premiums? ` Prob End """ }