Re: It\'s a shame about my street
[ QUOTE ]
If like almost anyone in the world, the homeowners in question value their homes, it seems entirely likely that they'd buy that insurance, (even if -EV, being that nearly all types of insurance is -EV).
Also, to respond to this part:
[ QUOTE ]
Not to mention the fact that we wouldn't have to go through the hassle of having our homes destroyed, then collecting a million dollar check.
[/ QUOTE ]
It's very possible the insurance companies could decide to create the dam. They'd rather pay $7.5 million then $10 million, right?
[/ QUOTE ]
Yes, once the probabilities changed, the insurance company would build the dam rather than pay out. But the point is that buying insurance is -EV, as you admit. So yeah, we might have gotten lucky if we had purchased insurance before the probability of flooding changed, but that doesn't mean it was the optimal play. I could make a poker analogy here, but I think you get the point.
|