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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 ...
Akerlof's theory has been used to explain this scenario where insurance companies charge higher premiums to individuals who they believe carry out more risk in attempt to compensate for the greater chance that claims are filed under the individual's policy. Another example of an empirical application is within the labour market where, wage ...
Credibility comprises the objective and subjective components of the believability of a source or message. Credibility dates back to Aristotle theory of Rhetoric. Aristotle defines rhetoric as the ability to see what is possibly persuasive in every situation. He divided the means of persuasion into three categories, namely Ethos (the source's ...
Source credibility is "a term commonly used to imply a communicator's positive characteristics that affect the receiver's acceptance of a message." [1] Academic studies of this topic began in the 20th century and were given a special emphasis during World War II, when the US government sought to use propaganda to influence public opinion in support of the war effort.