= Solution
Under $M_1$, <Bayes theorem> at the nested value $\psi=0$ gives
$$
p(\psi=0\mid D,M_1)
=\frac{p(D\mid\psi=0,M_1)p(\psi=0\mid M_1)}{p(D\mid M_1)}.
$$
Separability of the prior and equality of the $\phi$ priors imply
$$
p(D\mid\psi=0,M_1)
=\int p(D\mid\phi,\psi=0,M_1)p(\phi\mid M_1)\,d\phi
=p(D\mid M_0).
$$
Rearranging proves the <Savage-Dickey density ratio>
$$
B_{01}
=\frac{p(D\mid M_0)}{p(D\mid M_1)}
=\left.
\frac{p(\psi\mid D,M_1)}{p(\psi\mid M_1)}
\right|_{\psi=0},
$$
which is the <Bayes factor> in favor of the nested model.
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