Indifference curves in ly-ls space Downward sloping 6 Willing to give up income in one state if compensated for more income in the other state 2)Convex More downward-slopingat low levels of Iy but flatter at high levels U1- C2 Is and IH are imperfect substitute: Result of risk aversion C3 C4 E Bhattacharya,Hyde and Tu-HealthEconomics Bhattacharya, Hyde and Tu – Health Economics Indifference curves in IH -IS space 1) Downward sloping  Willing to give up income in one state if compensated for more income in the other state 2) Convex  More downward-sloping at low levels of IH but flatter at high levels  IS and IH are imperfect substitutes  Result of risk aversion