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If you assume a well-functioning insurance market, I think the argument can be made that the negative expected value should however be very small. Then going on
by ip26 6y ago
If you assume a well-functioning insurance market, I think the argument can be made that the negative expected value should however be very small. Then going one step further, I think mitigating downside potential is actually the opposite of gambling. Driving without insurance is gambling.
- RugnirViking 6y agowhat does "well functioning" mean in this case? The insurance market's profits literally are the negative expected value. If the negative expected value is very small, there are very small profits for the insurance companies. They would only do that if there was pressure on them re competition, which is the opposite of what is happening nearly everywhere in almost every market. High competition low profits would be well functioning for a consumer, low competition high profits would be well functioning for an investor