Rudiments of insurance purchasing: A graphical state-claims analysis (Q1116615)

The purpose of this note is to show how some of the main results existing in the insurance literature can be easily and effectively illustrated using a state-claims approach instead of the traditional utility analysis, which is more popular in insurance research and teaching. This approach is used to show how the level of insurance purchased changes as a function of a fixed and proportional loading factor, and under varying degrees of risk aversion, and alternative state-dependent utility environment.