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On the contrary, you want your fund to cover unlucky situations. By linking the size of the insurance to a random number, you cancel out unlucky external events
by function_seven 3y ago
On the contrary, you want your fund to cover unlucky situations. By linking the size of the insurance to a random number, you cancel out unlucky external events with a lucky internal event, thereby ensuring proper coverage.
So long as the random value is truly random. Were there lava lamps in the FTX server room?
- Incipient 3y agoYou don't cover "unlucky" with 'random numbers". You cover it with a detailed risk analysis. Insurance companies have very detailed models on how much risk their customers provide, how much they're likely to cost, and charge accordingly. They don't just go "yolo random(1,100)'l" and hope they're in business in 5 years.
- fnordpiglet 3y agoWell, a random number covers nothing at all. Money covers risk, a number backed by nothing is nothing.
- londons_explore 3y agoIn this case, the random element was almost insignificantly small after a few days. The fund size was 7500 * the trading volume since the fund was set up.
- gcr 3y agoOP was joking