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Credibility theory. Credibility theory is a branch of actuarial mathematics concerned with determining risk premiums. [1] To achieve this, it uses mathematical models in an effort to forecast the (expected) number of insurance claims based on past observations.
Bühlmann model. In credibility theory, a branch of study in actuarial science, the Bühlmann model is a random effects model (or "variance components model" or hierarchical linear model) used to determine the appropriate premium for a group of insurance contracts. The model is named after Hans Bühlmann who first published a description in 1967.
Adverse selection. In economics, insurance, and risk management, adverse selection is a market situation where asymmetric information results in a party taking advantage of undisclosed information to benefit more from a contract or trade. In an ideal world, buyers should pay a price which reflects their willingness to pay and the value to them ...
Scientific credibility has been defined as the extent to which science in general is recognized as a source of reliable information about the world. [19] The term has also been applied more narrowly, as an assessment of the credibility of the work of an individual scientist or a field of research.
Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect against the risk of a contingent or uncertain loss. An entity which provides insurance is known as an ...
The credibility thesis is a proposed heterodox theoretical framework for understanding how societal institutions or social rules come about and evolve. It posits that institutions emerge from intentional institution-building but never in the originally intended form. [1] Instead, institutional development is endogenous and spontaneously ordered ...
In American slang, a lemon is a car that is found to be defective after it has been bought. Akerlof's theory of the "Market for Lemons" paper applies to markets with information asymmetry, focusing on the used car market. Information asymmetry within the market relates to the seller having more information about the quality of the car as ...
In insurance, the insurance policy is a contract (generally a standard form contract) between the insurer and the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for an initial payment, known as the premium, the insurer promises to pay for loss caused by perils covered under the policy language.