Artificial Intelligence / AI 0359 · Atom · ~20 seconds
Insurance, Rationally
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On a bent money-to-utility curve, a certain small premium can beat a small chance of ruin — so buyer and seller of a policy can both be rational at once.
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The buyer trades dollars-on-average for protection in utility; the insurer, pooling many curves, profits in dollars.
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The trade is rational against ruin-shaped risks — insuring trifles buys nothing the curve values.
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