... 0,ˆa 1 = 0, p ≤ p < pb. (16 .14 )August 18 , 2007 Time: 11 :25am chapter16.texChapter 16 • 15 1Denote by ϕ expected profits in the period -1 market for annuities, ϕ(q 1 1) =ppa(q 1 1− ... thatˆa 1 andˆb 1 depend implicitly on q 1 1and q2 1 and on˜y 1 1(p) and˜y2 1 (p), defined above. Thus, the existence and uniqueness of (ˆq 1 1,ˆq2 1 ),defined by (16 .20) and (16 . 21) , ... pa= λq 1 1, whereλ =u(y0+ y 1 − E( p)ˆa0)u(ˆa0), (16 .12 )withˆa0determined by (16 .10 ) and (16 .11 ):− E [u(y0+ y 1 − E( p)ˆa0− q 1 1ˆa 1 (p) + q2 1 ˆb 1 (p))]E...