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<div><font size="2">> From: abd@lomaxdesign.com<br>
> Subject: Re: [<span class="correction" id="">EM</span>] RE : Re: Range voting, zero-info strategy simulation (raphfrk)<br>
><br>
> At 05:12 PM 11/1/2006, raphfrk@netscape.net wrote:<br>
><br>
> >This is why insurance companies exist. People pay say 1%<br>
> >of the value of a thing in order to insure against a risk<br>
> >that is say 1 in 200 of happening. The expected benefit of<br>
> >the insurance is less than the cost, but it is still worth<br>
> >getting.<br>
><br>
> It would be more accurate to say that people are willing to pay to
avoid risk, and sometimes they are willing to pay more than the
expected cost of the risk. Insurance is like gambling in some ways.<br>
><br>
> The insurance company is the House. It is also making the same bet
on the other side. It is willing to accept a large risk for a small
positive expectation. Plus it gets to invest the reserves....<br>
<br>
Actually, it isn't accepting a large risk. The service it<br>
provides is to combine risks, so that the effective risk<br>
is reduced. However, there are some exceptions. For <br>
example, if a major disaster occurs, all those single <br>
houses cannot be considered independent risks.<br>
<br>
> (You have to have reserves to play this game. But the reserves can
be invested, they do not have to be sitting in a no-interest checking
account....)<br>
><br>
> Yes, risk aversion is a known behavioral pattern. It is not
necessarily rational, which is why I object to "it is still worth
getting."<br>
><br>
> Sometimes it is, sometimes it is not. If you can absorb the loss, it is *not* worth getting by any rational standard.<br>
<br>
I agree, this is why I don't think health insurance should<br>
cover minor treatments. For example, your insurance may<br>
cover say $40 per doctor visit which is pointless insuring.<br>
<br>
<span class="correction" id="">OTOH</span>, if the cost is a $50k-$100k operation then it should<br>
be covered.<br>
<br>
The counter <span class="correction" id="">argument</span> is that you know if you get the <br>
insurance, you will visit the doctor more and that is <br>
what you want. It works similar to paying in advance<br>
before going into a theme park and then all the rides <br>
are free.<br>
<br>
There is another thing that health insurance provides, it<br>
allows people to not have to think about their health.<br>
Thus, they don't want to be given statistical breakdowns<br>
of risk/reward. (as you point out).<br>
<br>
I would like to be able to insure my life for a certain amount<br>
per year. However, most people would be horrified, they <br>
don't want to have to make such a decision.<br>
<br>
However, this means that when the insurance must provide<br>
all possible treatments, irrespective of price.<br>
<br>
This means that the insurance contract is <span class="correction" id="">alot</span> more complex,<br>
as it has to cover exceptions. Under my scheme, companies<br>
could just say "We will provide cover if the treatment is <br>
expected to increase your lifespan by at least 1 year for every<br>
$100k we spend."<br>
<br>
There would have to be a similar condition for quality of life <br>
too. However, defining that is hard ... maybe they need an<br>
industry standard.<br>
<br>
There would also have to be a rule for pre-existing conditions.<br>
Also, the premiums that must be paid would have to either<br>
be frozen or limited in how fast they can increase once<br>
a condition is detected.<br>
<br>
><br>
> There is one argument for insurance. If you are going to worry,
worry is bad for your health. If you can't find a way to avoid
worrying, one could consider insurance as a palliative treatment for
your anxiety disorder....<br>
><br>
> Or insurance is worth getting if for some reason you expect higher
than average losses. Which might be fraud, under some circumstances.<br>
<br>
This is the whole self-selection effect. Insurance<br>
companies have to assume that they are getting<br>
worse than average risk customers. This means that<br>
they have to increase their premiums, but that means<br>
that the people who get insurance are even worse and<br>
so they have to increase their premiums even more.<br>
<br>
The end result is that the companies have to price<br>
insurance based on (near) worst case results.<br>
<br>
This is why things like group schemes work. If the<br>
people in the group scheme are there for some reason<br>
other than getting insurance (like it is connected to<br>
their job), then the companies can charge premiums<br>
closer to average risk as people can't self select.<br>
<br>
><br>
> >In any case, on the topic at hand. I think that<br>
> >there would be people in an election who wouldn't<br>
> >vote perfect strategic because they are afraid that<br>
> >their least favorite will win.<br>
><br>
> And this is good. I suspect that if you do a risk analysis, you'd
find that optimizing the average value of the election would indicate
not voting pure favorite-win strategy, as long as there is another
candidate reasonably close in preference.<br>
<br>
However, the <span class="correction" id="">sims</span> show that the expected value is<br>
higher if you use one of the strategic schemes.<br>
<br>
Another type of <span class="correction" id="">sim</span> would be one that takes into account<br>
the potential problems if the elected official is bad for<br>
other people.<br>
<br>
This would mean that the utility of a candidate is equal<br>
to the utility to the voter plus some fraction of the<br>
utility to society.<br>
<br>
For example,<br>
<br>
U = 0.95*<span class="correction" id="">Uv</span> + 0.05*Us<br>
<br>
<span class="correction" id="">Uv</span> = <span class="correction" id="">voter's</span> utility<br>
Us = average social utility<br>
<br>
This would take into account the effects of things<br>
like filibusters and also public protests and hard<br>
feelings in society.<br>
<br>
The voter would know <span class="correction" id="">Uv</span> with much higher accuracy<br>
than Us.<br>
<br>
Another way of looking at it is that <span class="correction" id="">Uv</span> is the utility<br>
to the voter of the candidate, assuming that the <br>
candidate doesn't cause major social problems when<br>
he tries to implement his ideas. By including Us,<br>
it includes these effects as well.<br>
<br>
Another option would be to include a function that <br>
incorporates the <span class="correction" id="">rms</span> of the difference between the<br>
final result and the voters' preferences.<br>
</font><br>
<br>
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<div> </div>
<div style="clear: both;">Raphfrk<br>
--------------------<br>
Interesting site<br>
"what if anyone could modify the laws"<br>
<br>
<span class="correction" id="">www</span>.<span class="correction" id="">wikocracy</span>.com</div>
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