Article ID Journal Published Year Pages File Type
5076162 Insurance: Mathematics and Economics 2017 31 Pages PDF
Abstract
We conclude that pooling risks is fundamental for understanding the mechanisms of insurance because it favourably affects the utility of policyholders, and we refer to this phenomenon as the 'utility-improving effect of risk pooling'. Moreover, we demonstrate that the utility of the policyholder is (strictly) increasing with the size of the risk pool.
Related Topics
Physical Sciences and Engineering Mathematics Statistics and Probability
Authors
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