Question

14. Spousal Insurance Policies. Consider two alternatives insuring the lives of two part ners: ( individual policies for each spouse paying 2 at each death time (so buy 2 individ- ual policies). (ii) a spousal policy that pays B when the first spouse dies. The present values of () and (i) are zX+2RY and Z2 - Be-r, respectively, where X and Y are the remaining lifetimes of the two insureds (in years), T min(X, Y) is the first death time of the two insureds, and R is a continuously compounded interest rate (annualized). In this setup. X, Y and R are all random variables. Assume that X and Y are independent exponential RVs with common mean μ and that R is discrete uniform on 10.02,0.04, 0.06), independent of X and Y (a) Given R-r, find the death benefit for the spousal policy, Br, that makes EZİR (b) In plain language explain why it makes sense that Bf

Answer 1

Roger's Theory- Diffusion of Innovation deals with the idea of how an innovation finds its space among the individual participants and the institutions as a whole. Roger proposes that Innovation needs four key elements or participants to influence its spread among the stakeholders. The four elements are 1. The Innovation itself: Anything that solves a human problem or reduces the effort to reach output from the input is called innovation. It can be process innovation, a service innovation or a product innovation. It is meant to reduce the effort to achieve an end result. 2. The Communication Channel: The medium of propagation of innovation is very crucial as information flow is very crucial for an innovation to propagate and increase participation and hence increase the life cycle of innovation. 3. Time: An innovation needs to pass the test of time. For a change to be accepted by all, take time and iterations. The telephone required participation from all adopters for the network to be successful and it took a fair amount of time 4. Social System: Roger's suggests that external participants such as Mass media, government regulations, and internal stakeholders' family, relationships etc. determine the social system and everyone must participate for innovations to flourish.