In an ad for insurance, the text reads "Life's an adventure, and there are plenty of perils awaiting your jewelry: a lost or broken stone, theft, accidental loss, damage, mysterious disappearance Have you thought about insurance?" What is the economic reasoning for an individual to buy insurance?
A) Individuals who buy insurance are profit maximizers.
B) Individuals who buy insurance are rational.
C) Individuals who buy insurance are dishonest and can profit from dishonesty.
D) Individuals who buy insurance increase their expected utility by owning insurance.

Question

Quizplus · Accepted Answer

Insurance allows individuals to mitigate risk and protect against potential financial losses, thereby increasing their expected utility by providing peace of mind and financial security.

In an Ad for Insurance, the Text Reads "Life's an Adventure