Re: Health Insurance EV question
zeebo-
health insurance is +eUtility because of decreasing marginal utility of $.
You probably know what this is or can figure it out but for those that dont, it just means that a dollar is worth more when you are poor and less when you are rich in terms of utility.
So the money lost is more damaging when you lose a lot of cash due to an operation than the small amount of money you pay for insurance, even if they have the same expected value. i.e. if you lose $100 10% of the time for health reasons and it costs 10$ to be fully insured, you should prefer to fully insure yourself. This is the because the $ vs utility curve is generally modeled as a logarithmic function.
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