Kim Scheinberg posted a really interesting article on BARGE that she found on Slate regarding the wisdom of buying insurance. While interesting by itself, if you look at the implications in poker or other gambling decision making, it’s quite enlightening.
Most people like insurance because they dislike risks. Economists used to think that this tendency was rational: Your first million dollars is worth more to you than your second million dollars, so you should be reluctant to wager your first million on a coin toss. What you might win (your second million) is worth less to you than what you might lose (your first million).
That explains why people would want insurance for million-dollar risks, but not $90 risks. It is not at all clear that the $90 that you might lose if your phone is stolen is so much more significant than the $90 you might “win” by not paying for a year’s insurance.
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Hi, my name is Bill Rini and this is my poker blog. I've been blogging about poker and the poker industry since around 2003-ish. Like most people I started out playing poker as entertainment in home games whenever we wanted to sit around and smoke cigars, drink beer, and eat pizza, and needed a good excuse. I started playing online shortly after the first online card rooms opened and it wasn't long before I was playing 20, 30, or even 40 hours a week or more. One day I received a phone call about a program manager position at Tiltware which was the company that consulted to Full Tilt Poker on software development and marketing. After Tiltware I spent about 2.5 years working at Party Poker where I was the poker room manager.
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