Suppose that agents have a utility function that is given by U (c) = c. Agents have an income of $1, 500. If they decide not to get a vaccine, the probability of getting the associated infectious disease is 20%. However, if they get a vaccine, the probability of getting the infectious disease is 2%. Contracting the infectious disease requires agents to pay $1, 300 in medical expenditures. Assume, for simplicity, that getting the vaccine has a utility cost of 1 util (because of, say, time and side effects costs). Suppose that an insurance company offers an actuarially fair contract that covers all the costs above $200, i.e., there is a $200 deductible