Case study: Console Insurance

by gwern 1 min read5th Mar 20117 comments


I've sometimes seen people say that they need concrete simple examples of ideas like expected utility and Bayes' theorem. So, continuing in the same vein as An Abortion Dialogue and Case Study: Melatonin, I recently polished up my shorter-but-hopefully-still-interesting article on Console Insurance.

It's basically a short discussion of how back of the envelop estimates show console insurance (and by extension, most warranty extensions) to be a bad investment.