@cshentrup yet, we find ourselves unable to reliably prevent fires so certainly we don't need to worry about the, um, risk. most of us are not able to save enough to cover that eventuality from savings. so we choose to bear costs of administration—deadweight costs relative to the first or second best solutions—to pay for fire insurance. is that rational, smart, under the circumstances? it depends on the scale of the costs. if premia were much higher than the expected loss, no. if near, yes. 2/