Question: A paper investigates the average demand for insurance (without plot specific premiums) by farmers in the Philippines. The relationship between insurance purchases (1st being the
A paper investigates the average demand for insurance (without plot specific premiums) by farmers in the Philippines. The relationship between insurance purchases (1st being the group that buys the most) and outcomes are shown in the graph below. Assume the insurance company cannot tell the difference between plots.

Flooding index High risk of rats 0.20 022 0.22 0.30 0. 17 -3-2-.1 0 .1 .2 -0.01 0 .05 .1 .15 .2 .25 -0.15 -0.25 1st 2nd 3rd 4th or above 1st 2nd 3rd 4th or above High tungro risk Plot size 0.18 0.70 0.14 0 13 0.54 0.53 0.60 0.12 0 .05 1 .15 .2 1st 2nd 3rd 4th or above 1st 2nd 3rd 4th or above Average share of harvest lost Standard deviation of share of harvest lost 26.9 23.2 24.1 21.1 20.4 27.2 25.5 23.3 10 2 10 O 1st 2nd ard 4th or above 15t 2nd 3rd 4th or above
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