Darby Quast, Chapter 7, Question 6

One passage that I found very interesting in this chapter was about how people deal with risk.  From natural disasters to price of ground beef, people are willing to pay for certainty.  An example would be the health, life, and auto insurance industry.  Because people are worried about the worst possible outcome, they are willing to pay more than they will probably ever receive or need.  On average the chances of a tree falling on your car are pretty low, but what if?  By having the insurance it eliminates the "what if" factor and the person will know without fail, that he or she will be able to get their car fixed.  Having this certainty outweighs the cost of the insurance for many people.  An example on a much bigger scale would be when a French oil tanker was hit by a suicide bomber speed boat.  The insurance company ended up giving up 70 million dollars to cover the damages.  Again, the chances of this event happening were probably fairly low, but the risk was still too high to not buy insurance.