RISK POOLING: Combining the uncertainty of individuals into a calculable risk for large groups. For example, you may or may not contract the flu this year. However, if you're thrown in with 99,999 other people, then health-care types who spend their lives measuring the odds of an illness, can predict that 1 percent of the group, or 1,000 people, will get the flu. The uncertainty is that they probably don't know which 1,000 people, they only know the number afflicted. This little bit of information is what makes risk pooling possible. If the cost is $50 per illness, then an insurance company can insure your 100,000-member group against flu if they collect $50,000 ($50 x 1,000 sick people), or 50 cents per person. By agreeing to pay the cost of each sick person in exchange for the 50 cent payments, the insurance company has effectively pooled the risk of the group.

     See also | risk | uncertainty | income | insurance | profit | risk loving | risk neutral | risk pooling | risk premium | entrepreneurship | hedging | speculation | financial market | mutual fund |

RISK POOLING, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2026. [Accessed: July 22, 2026].

Additional information on this term can be found at:

WEB*pedia: risk pooling

Back to the GLOSS*arama

A demand curve with two distinct segments which have different elasticities that join to form a corner or kink. The primary use of the kinked-demand curve is to explain price rigidity in oligopoly. The two segments are: (1) a relatively more elastic segment for price increases and (2) a relatively less elastic segment for price decreases. The relative elasticities of these two segments is based on the interdependent decision-making of oligopolistic firms.

Complete Entry | Visit the WEB*pedia

Today, you are likely to spend a great deal of time calling an endless list of 800 numbers trying to buy either a set of luggage without wheels or a how-to book on wine tasting. Be on the lookout for cardboard boxes.
Your Complete Scope

This isn't me! What am I?

-- Henry Ford, automaker

User Feedback