Sunday, August 26, 2012

Astronaut self-insurance durable goods monopoly problem

First thought was adverse selection (as with preexisting conditions), but I don?t think that?s right. Better explanation is that back then no one had a clear sense of the mortality risk associated with going into space, and the population was so small it didn?t make sense for the insurance companies to invest the resources needed to come up with useful numbers. Still, hard to believe astronauts couldn?t find policies (albeit very expensive ones) at Lloyd?s of London or something.

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Source: http://marginalrevolution.com/marginalrevolution/2012/08/astronaut-self-insurance.html

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