Al-Nowaihi, Ali; Dhami, Sanjit S. - 2010
underweight high probabilities. (2) Ignore events of extremely low probability and treat extremely high probability events as … certain. (3) Buy inadequate insurance for very low probability events. (4) Keeping the expected loss fixed, there is a … probability below which the take-up of insurance drops dramatically. Expected utility (EU) fails on 1-4. Existing models of rank …