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Physical Picture of the Insurance Market

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  • Amir Hossein Darooneh

Abstract

We find the wealth distribution for an economic agent in the financial market, in analogy with standard derivation of generaliz Boltzman (Tsallis) factor in statistical mechanics. In this respect, Tsallis entropic index separates two different regimes, the large and small size market. The Pareto like wealth distribution is obtained in the case of small size market. A method for computing the premium is suggested based on the surplus average vanishing.

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  • Amir Hossein Darooneh, 2004. "Physical Picture of the Insurance Market," Papers cond-mat/0404680, arXiv.org.
    • Handle: RePEc:arx:papers:cond-mat/0404680
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    Cited by:

    1. Lai, Li-Hua, 2015. "Statistical premium in correlated losses of insurance," Economic Modelling, Elsevier, vol. 49(C), pages 248-253.

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