Chapter
The Game Theory of Insuring Against Bank Runs
1:05:02 - 1:08:16 (03:13)
The more people you insure against a bank run, the cheaper the insurance will be, but insurance models struggle with tail events that may never happen.
Clips
The possibility of ending up with negative equity in the bond market can pose a significant financial risk.
1:05:02 - 1:06:38 (01:35)
Bond Market
Summary
The possibility of ending up with negative equity in the bond market can pose a significant financial risk. One potential solution is to raise the FDIC to 2.5 million or base it on company employee numbers, or allow a higher business class of FDIC to minimize these risks.
ChapterThe Game Theory of Insuring Against Bank Runs
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The more people that are insured, the cheaper the insurance will be, according to actuarial or free market underwriting.
1:06:38 - 1:08:16 (01:37)
Insurance
Summary
The more people that are insured, the cheaper the insurance will be, according to actuarial or free market underwriting. However, the problem with most insurance models is that they focus on extreme tail events that have never happened before.