As portfolio theories assume risk averse households, insurance buying gambler seems to conflict with this assumption. This conflict causes a discussion on the applicability of the portfolio theories. Double humped Friedman-Savage utility function, which assumes that households can be risk lover temporarily, is even though criticised in the literature for violating concavity does also constitute a basis for the discussions regarding the insurance buying gambler. One of these discussions suggests that the main reason for this seemingiy paradoxical behaviour is that households' aim to distribute their total income to their lifetime evenly. While Eden (1977) argues that households substitute present risk for future risk, some others suggest that the restrictions rising from the labour markets is the reason for insurance bııying gambler.With a simple approach, households, seemingly in a paradox are in fact, choosing a mixture of insurance and gambling to overcome the restrictions they have to face and to distribute their total income relatively equal. And by this way, more importantly, they not only increase their own utility but also cause an increase on the total utility of the society.
Key words: Gambling, Insurance, Utility, Risk Article Language: EnglishTurkish
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