1 / 39

Diversification of Parameter Uncertainty

Defining an Ambiguous Risk. Case 1: Risk: 2% chance of hurricane next year.Case 2: Ambiguity: Expert 1 says 1% chance, Expert 2 says 3%. You think there is a 50% chance of each expert being correct.. Effect of Ambiguity on Premiums. Hogarth and Kunreuther (1989) surveyed actuaries. They found for risks of this size, the ratio of prices charged for ambiguous and standard risks was in the range 1.50-2.00..

Leo
Download Presentation

Diversification of Parameter Uncertainty

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

    More Related