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Insurance Makes Wealth Grow Faster -

taylorpearson.me · 1,138 words · saved by 1 readers

The traditional view of insurance is that it is a “win-lose” proposition. There are three reasons that insurance would exist: Asymmetric information – one party knows something that the other doesn’t. Irrationality – one party (typically the insurance purchaser) is dumb. Risk aversion – the buyer of insurance knows they are making a losing bet,... [Read more]

The traditional view of insurance is that it is a “win-lose” proposition. There are three reasons that insurance would exist: Asymmetric information – one party knows something that the other doesn’t. Irrationality – one party (typically the insurance purchaser) is dumb. Risk aversion – the buyer of insurance knows they are making a losing bet, but are willing to do this as a way to be more “conservative.” This thinking would imply that buying home insurance is a losing proposition and that most people do it because they don’t evaluate the odds correctly or they are irrationa

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