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The theorem of existence of the ruptures in probability scale and the basic question of insurance

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  • Harin, Alexander

Abstract

The theorem of existence of the ruptures in the probability scale was proved in 2010. The theorem is used to analyze and to partially answer to the basic questions of insurance. The question is “To insure or not”. The goal of this paper is to reveal pure mathematical aspects of insurance processes and to analyze these aspects by pure mathematical methods, including application of the theorem. Its most significant result: when uncertainty increases, then taking the theorem into account may reverse insurant’s and insurer’s decisions to the opposite ones.

Suggested Citation

  • Harin, Alexander, 2011. "The theorem of existence of the ruptures in probability scale and the basic question of insurance," MPRA Paper 34780, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:34780
    as

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    File URL: https://mpra.ub.uni-muenchen.de/34780/1/MPRA_paper_34780.pdf
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    References listed on IDEAS

    as
    1. David M. Cutler & Amy Finkelstein & Kathleen McGarry, 2008. "Preference Heterogeneity and Insurance Markets: Explaining a Puzzle of Insurance," American Economic Review, American Economic Association, vol. 98(2), pages 157-162, May.
    2. Alexander Harin, 2010. "The theorem of existence of ruptures in the probability scale," Economics Bulletin, AccessEcon, vol. 30(2), pages 1-16.
    3. Alexander Harin, 2010. "The ruptures in the probability scale and some problems of modelling," Economics Bulletin, AccessEcon, vol. 30(2), pages 1-18.
    4. Winter, Ralph A, 1991. "Solvency Regulation and the Property-Liability "Insurance Cycle."," Economic Inquiry, Western Economic Association International, vol. 29(3), pages 458-471, July.
    5. Emilio C. Venezian, 2006. "The use of spectral analysis in insurance cycle research," Journal of Risk Finance, Emerald Group Publishing, vol. 7(2), pages 177-188, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    insurance; underwriting; probability; uncertainty; dispersion;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics

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