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No, because the utility of money isn't linear. It often makes sense to pay a bit more than $1000 to mitigate a 1% chance of losing $100k.
by orangecat 2y ago
No, because the utility of money isn't linear. It often makes sense to pay a bit more than $1000 to mitigate a 1% chance of losing $100k.
- Scoundreller 2y agoIf insurance pricing is perfect, they’ll charge you $100k+ if you’re going to have a $100k claim.
- s1artibartfast 2y agoUnderrated comment. perfect prediction turns insurance into a payment plan.
- potato3732842 2y agoA really crappy payment plan that has a ton of overhead you pay extra to make up for.
- diogocp 2y agoThat's not how insurance works. You buy insurance if there is an uncertain outcome, e.g. a 1% probability of having a $100k claim. In which case you can expect to be charged around 1% of $100k (plus admin costs and whatnot). Perfect information means you know the exact probability of the event happening. It doesn't mean that you know with certainty whether an event will happen or not. That would require a crystal ball or a time machine.
- bluGill 2y agoIf I'm going to have a $100k claim I'm not going to drive. There is nothing in life worth doing despite it causing a $100k claim. It can wait (or I'll pay for a taxi). However I need to do things and there is a small chance I will do something wrong and thus incure that $100k claim.