Re: Wynne-Edwards ( was Homosexuality)


"John Edser" <edser@xxxxxxxxxx> wrote in message news:dr9ohv$h0q$1@xxxxxxxxxxxxxxxxxxxxxx
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> > > JE:-
> > > To my knowledge game theory does indeed concern itself with risk
> > > minimization but not via risk trading.
> > > To refute my claim please provide an example.
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> > There is quite a large body of literature on the topic of
> > "moral hazard" which is a concept in economics that you can look
> > up on the web.
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> JE:-
> My understanding is that such events do not _mutually_ exchange risk they
> only do so, NON mutually. Companies do not normally accept risks without
> ascertaining the "insurable interest" of each client. This means, if the
> gains to the client become larger and not smaller if the underwritten risks
> become an empirical reality, then it is not to the interests of the company
> to insure that client at that premium. Both clients and insurance companies
> remain independent of each other and act in self interest.

Which is exactly the situation that game theory was invented to
analyze. Independent self-interested agents.

> However, because
> BOTH of them are acting in self interest the better companies are the ones
> who get closer to the point of mutualisation and not further away from it.
> They make bigger profits with less effort and stay around for longer periods
> of time (are more stable). The same thing happens in nature using
> unconscious mutualised selection.

I'm surprised that you refer to 'the point of mutualization', since
you frequently point out that while both parties to mutualism benefit,
the benefit may not necessarily be equal. Thus, I would think that
there are many points of mutualization. A whole 'Edgeworth curve'
of points. You can look this up in Google. You may also be
interested in reading about the "Nash Bargaining Problem"

> > I have seen several game-theoretic analyses
> > related to the insurance industry. The size of co-payments
> > in medical insurance is just one typical issue that might be
> > analyzed within a game theory framework.
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> JE:-
> Sounds interesting.. please expand your argument.

I wasn't making an argument. I provided the example that you
requested of Guy. You can read all about it on the web.
I used the Google string
moral hazard game theory insurance
and got 196000 hits. The first few were right on target.


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