Suppose insurance is offered at fair actuarial price

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Reference no: EM13774020

Suppose you could get an individual insurance to protect you against the unauthorized access to your laptop. The chance that someone will gain access to your machine is 0.10. In that case you will incur a loss of $200 (valuable information becomes available to other, hassle of fixing your machine etc). You could reduce the probability of unauthorized access by half by changing your password frequently. However, changing password frequently is a hassle for you and this inconvenience is worth $8 to you. Suppose insurance is offered at fair actuarial price

If you could not purchase insurance, would you change your password frequently? Explain using the numbers given.

Reference no: EM13774020

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