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Paper Topic:

Childhood Reflection Assignment

The payoff will only be available to his grandson if he dies within these 10 years , otherwise he won 't get anything

Game Theory Matrix

Death Insurance Strategy Yes No

Yes Pay off of 1 ,00 ,000

Loss of 10 ,000

Lost opportunity to earn 11488

No (Invests in the Gov . Bond ) Pay off of 11488 plus

Lost opportunity to earn 1 ,00 ,000 Pay off of 11488 From the above matrix , if Mr . X chooses to buy the insurance and dies within 10 years his grandson gets

1 ,00 ,000 . If he chooses to buy and doesn 't die then he loses and an opportunity to earn 11488 from the Government bond . If he doesn 't buy insurance and dies , then his grandson gets the payoff from Government bond but loses and opportunity to earn 1 ,00 ,000 from the insurance cover . If he doesn 't invest and doesn 't die then the grandson simply gets a payoff of 11488

So if he goes for the insurance cover , the maximum his grandson will lose is 10 ,000 (means he won 't get anything . While if he doesn 't go for insurance then the maximum profit is 11488 while the maximum opportunity loss becomes 1 ,00 ,000 . Now considering the bad health of Mr . X the probability of his death within 10 years is on the higher side , so he should go for the insurance cover

References

Game Theory

http /www .beyondintractability .org /essay /prisoners_dilemma

Why term life insurance is a good idea

http /www .dancewithshadows .com /business /term-insurance .asp

Term Life Insurance http /www .lowtermliferates .com /termlife .php

Term Life Insurance Policies

http /www .lowtermliferates .com /termlife .php

Glenn S . Daily . How much Life insurance do you need

http /www .glenndaily .com /documents /howmuch .pdf

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