Re:When Is Insurance Worth It?
by kqr on Saturday December 21, 2024 @03:20AM
(#42478213)
> (we know it doesn’t do that!)
...but it does do that under the assumption of compounding, and that's part of why it exists. I recommend learning about the Kelly criterion and E log X strategies to see why.
The key insight is we shouldn't look at the arithmetic expectation of profits of isolated bets beccause that causes us to overinvest in uncertain profits and underinvest in insurance.
...but it does do that under the assumption of compounding, and that's part of why it exists. I recommend learning about the Kelly criterion and E log X strategies to see why.
The key insight is we shouldn't look at the arithmetic expectation of profits of isolated bets beccause that causes us to overinvest in uncertain profits and underinvest in insurance.