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In gambling you pay someone to take risk for you. In insurance you pay someone to take risk for you. They are the same tool; we just give it a different name wh
by adw 2y ago
In gambling you pay someone to take risk for you. In insurance you pay someone to take risk for you. They are the same tool; we just give it a different name when we’re hedging from when we’re speculating.
- pdonis 2y ago> In gambling you pay someone to take risk for you. No, you don't, you take the risk yourself. You're certainly not paying the casino to take risks for you; you're paying them for the privilege of you taking risks (and losing on average) by playing their games.
- adw 2y agoYou’re paying them to take the higher variance end of a swap. That is exactly the same transaction as insurance, complete with the same pricing model.