Which statements about insurance are true? 1- Insurance protects against the the worst-case scenario. All rational people want to buy insurance. 2- Insurance costs money,
Which statements about insurance are true?
1- Insurance protects against the the worst-case scenario. All rational people want to buy insurance.
2- Insurance costs money, and therefore always decreases expected utility. Only irrational people want to buy insurance.
3- The decision to buy insurance does not depend on the insurance premium. The premium is a set cost without any random element.
4- No risk-lovers want to buy fair insurance.
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Statement 1 Insurance protects against the worstcase scenario All rational people want to buy insurance Evaluation True in part Insurance does protect against the worstcase scenario by transferring th...
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Authors: William Baumol, Alan Blinder
13th edition
1305280595, 1305280598, 9781305465626 , 978-1305280595
