Effects of insurance premium and deductible on production |
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| Authors: | Li-Hua Lai |
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| Institution: | Department of Risk Management and Insurance, National Kaohsiung First University of Science and Technology, Kaohsiung, Taiwan |
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| Abstract: | We consider a risk-averse firm bearing the revenue risk and fuzzy production cost. Using the quadratic utility function the sufficient conditions for a deductible insurance to increase the output are derived and found to be the functions of insurance premium and deductible. We also show that the optimal production for a firm in the fuzzy environment is less than that in the crisp environment. |
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