Article ID: | iaor19972023 |
Country: | Netherlands |
Volume: | 73 |
Issue: | 1 |
Start Page Number: | 39 |
End Page Number: | 43 |
Publication Date: | Feb 1994 |
Journal: | European Journal of Operational Research |
Authors: | Lahiri Somdeb |
Keywords: | insurance |
The purpose of this paper is to axiomatically characterize a Compromise Solution for claims problems which satisfies invariance under affine utility transformations. The more well-known solutions for claims problems do not satisfy this property. This is a major deficiency of the latter class of solutions, as they fail to predict appropriate responsiveness to risk aversion by one’s opponents. The present solution overcomes this deficiency.