Abstract
This article examines the interaction between the demand for deductible insurance and the demand for the asset that can be insured. A model where the decision-maker can choose both the insurance level and the amount of the risky asset to hold in the portfolio is used. Allowing simultaneous determination of the demand for an asset and the level of the deductible alters the comparative statics of demand for both the deductible level and for the asset. This is illustrated by determining the impact of shifts in nonrandom initial wealth, the price of the risky asset, and the price of insurance.
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