Collis Mckenzie, Chapter 5, Question 1

I was most interested by the concept of premiums on insurance. People with secure conditions take an educated gamble based on how likely they are to have something unfortunate happen to them. I heard the term "premium" earlier this week but didn't really understand what it meant. It was a strange coincidence that a concept was presented in my life just a few days before reading about it. Mr. Stromberg is my advisor and he told us about how he had a crappy week because his car was broken into and his computer stolen, and it was made even worse by the fact that he just changed his insurance to lower his premium.  This highlights many aspects of economics because Stromberg did the cost-benefit analysis of all the factors he had knowledge of and decided to lower his premium , but the thief did the cost-benefit analysis of stealing his stuff and decided to go for it. Stromberg did not have the information about his impending theft, and thus, unfortunately,was put into a bad situation.