THE ECONOMICS OF IMPERFECT INFORMATION 631
all the contracts the individual is offered, he chooses the one that maximizes V(p, a). Since he always has the option of buying no in- surance, an individual will purchase a contract a only if V(p, a) ? V(p, 0) = V(p, W, W - d). We assume that persons are identical in all respects save their probability of having an accident and that they are risk-averse (U" < 0); thus V(p, a) is quasi-concave.