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CAS Online Course 2, Second Edition Insurance Accounting, Coverage Analysis, Insurance Law, and Insurance Regulation

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Second, information should be thought of as better if it reduces the uncertainty surrounding some future cost or benefit. For instance, future liabilities are inherently uncertain. Information that can narrow the variance on estimates of those uncertain liabilities should be considered better information. Reduced variance is particularly valuable when decision-makers are risk-averse, since a reduction in variance alone can lead to different decisions when there is risk aversion. If decision-makers are risk neutral (basing decisions purely on the expected value of an uncertain parameter), reduced variance has no effect unless it is accompanied by a change in the parameter's expected value....
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CAS Online Course 2, Second Edition Insurance Accounting, Coverage Analysis, Insurance Law, and Insurance Regulation

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