An article in the Economist referred to the basic logic of the insurance industrythat it is impossible
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An article in the Economist referred to “the basic logic of the insurance industry—that it is impossible to predict who will be hit by what misfortune when, and that people should therefore pool their risks.” In what sense does insurance involve pooling risks? How does the problem of adverse selection affect the ability of insurance to provide the benefit of pooling risk?
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When for example you buy fire insurance you are pooling or ...View the full answer
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