Economics of Insurance - Softcover

Borch, K. H.

Softcover

ISBN 10: 1493304925 ISBN 13: 9781493304929

Publisher: North Holland, 2014

The theory of insurance is presented in this book, discussed from the viewpoint of the theory of economics of uncertainty. The principle of premium calculation which the book uses is based on economic equilibrium theory and differs from many of the premium systems discussed by actuaries. Reinsurance is developed in the framework of general economic equilibrium theory under uncertainty. Here ordering of risks, preferences and utility theory play an important role. The book discusses the markets for insurance and divides them into three classes: (i) life insurance (ii) business insurance and (iii) household insurance, and these classes are each treated extensively in three separate chapters. Finally uninsurable risks are presented under "asymmetric information" Here moral hazard and adverse selection are treated and illustrations are given, some based on game theory.

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Review:

So the book is much more than a memorial to a famous scholar. It is an advanced textbook, indeed, that gives a vivid testimony of how insurance, as a field of scientific endeavour, can and should be developed from the economic point of view...
Journal of Economics
... the book is illuminated by Borch's considerable experience and knowledge of insurance and any student interested in insurance markets would learn much by working their way through the models.
The Economic Journal

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