ECON 101 Lecture Notes - Lecture 18: Utility, Random Variable
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Assumptions: (cid:272)ase of loss (cid:894)(cid:862)i(cid:374)sura(cid:374)(cid:272)e(cid:863)(cid:895: premium are paid no matter what, the more you went back from the insurance company, the more premium you pay. = total amount of money paid by the insurance company in (cid:1868)= premium. = probability of loss: (cid:1868)= (premium is proportional to , (cid:1873) (cid:4666)(cid:4667)