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Foundations of Casualty Actuarial Science

 The insured loss should be definite or determinate
in time, place, cause, and amount

 The expected loss over some reasonable period of
time should be estimable.

 The loss should be accidental from the viewpoint of
the insured.

49. Utility Theory

Utility theory attempts to approximate the actual
satisfaction levels of various outcomes to indicate the
optimal strategies to follow in risky situations. This area
of research has produced recommendations as to the
optimal insurance policies to purchase, including
deductibles and policy limits, and when to "self-insure,"
e.g., retain, risks.

50. Game Theory
In game theory each player selects a strategy and the
resulting payoff is determined by the selected strategy
in combination with the strategies chosen by the other
players. Each person attempts to a maximize the utility
of his or her own payoffs, but, since the player cannot

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