Bridging the gap between risk and uncertainty in insurance

This contribution evokes Orio Giarini’s courage to think ‘outside the box’. It proposes a practical way to bridge the gap between risk (where probabilities of occurrence are fully known) and uncertainty (where these probabilities are unknown). However, in the context of insurance, neither extreme applies: the risk type of a newly enrolled customer is not fully known, loss distributions (especially their tails) are difficult to estimate with sufficient precision, the diversification properties of a block of policies acquired from another company can be assessed only to an approximation, and rates of return on investment depend on decisions of central banks that cannot be predicted too well. This contribution revolves around the launch of an innovative insurance product, where the company has a notion of whether a favourable market reception is more likely than an unfavourable one, of the chance of obtaining approval from the regulatory authority and the risk of a competitor launching a similar innovation. Linear partial information theory is proposed and applied as a particular practical way to systematically exploit the imprecise information that may exist for all of these aspects. The decision-making criterion is maxEmin, an intuitive modification of the maximin rule known from games against nature.

Can Contractualism Be Saved?

Over the past fifteen years, a number of scholars sympathetic to Scanlonian contractualism have sought to rescue it from the paradox created by Scanlon’s original ex post version: that the wrongness of an act depends on its consequences. Their proposed solution, “ex ante contractualism,” retains the most distinctive feature of Scanlonian contractualism, the maximin rule embedded in Scanlon’s Greater Burden Principle, but applies it to expected rather than actual outcomes. That change in epistemic perspective eliminates the paradox at the heart of ex post contractualism. But it introduces a number of equally serious problems that limit its application to a small set of stylized cases that have colonized the philosophical laboratory but are rarely encountered outside of it.

‘Bad character’, tragic errors and deep ignorance

This paper proposes new grounds for the legal ambivalence about ‘bad character evidence’. It is suggested that errors based on such evidence are profoundly tragic in the Aristotelian sense: the defendant who previously committed crime is likely to reoffend; nevertheless, she beats the odds and refrains from further crime commission – only to then be falsely convicted based on the very odds she has almost heroically managed to beat. It is further proposed that the tragic nature of such false convictions might make them particularly unfair to the defendant. It is, however, submitted that the likelihood of errors based on such evidence is unknown and probably also unknowable. Accordingly, the maximin rule for decision in conditions of deep ignorance is applied, leading to the conclusion that exclusion is to be preferred.

KEADILAN SOSIAL DALAM TANTANGAN EKONOMI PASAR. Mencermati Gagasan Keadilan Sosial Hayek

Is social justice or economic justice a utopia? This would be one of the questions that anyone might immediately raise as he/she reads Friedrick August von Hayek’s position on the idea of social or economic justice. As a classic liberal thinker, Hayek believed that the free market is the ideal economic system for it in nature promotes freedom and equality in a free and open society. Is Hayek’s defence of the free martket economy sufficiently convincing to eliminate any room for social or economic justice to take place? There is actually no free market in a pure sense. The market is not totally free from selfish interests that might be developed by market players themselves in doing business. It is therefore not reasonable to see the market as a purely spontaneous and independent entity. And since it is in fact open to selfish interventions, its outcomes may be just or unjust. Free competition, prompted systematically by the free market system, therefore, could risk human life. For this reason, state intervention to a certain extent is necessary to prevent market competition from endangering citizens’ economic prospects. The state’s intervention is important, as it is necessary, to secure social or economic justice. Social or economic justice is of course an ideal but not necessarily a utopia in a radical sense. Taking the unfortunates’ quality of life as the benchmark in designing and enacting economic policies, social or economic justice might be, at least partially, realized. John Rawls’ idea of maximin rule or maximin strategy can pave the way for the realization of such an ideal that every civilized person or society is essentially craving for. <b>Kata-kata Kunci:</b> Kebebasan, pasar bebas, katalaksi, spontan, impersonal, hukum, keadilan sosial, ekonomi komando, regulasi, maximin rule.

A SATISFACTORY MINIMUM CONCEPTION OF JUSTICE: RECONSIDERING RAWLS'S MAXIMIN ARGUMENT

John Rawls argues that it is possible to describe a suitably defined initial situation from which to form reliable judgements about justice. In this initial situation, rational persons are deprived of information that is ‘irrelevant from the standpoint of justice’. It is rational, Rawls argues, for persons choosing principles of justice from this standpoint to be guided by the maximin rule. Critics, however, argue that (i) the maximin rule is not the appropriate decision rule for Rawls's choice position; (ii) the maximin argument relies upon an imprecise account of the satisfactory minimum to be secured under the maximin rule; or that (iii) Rawls relies upon unrealistic assumptions about diminishing marginal value. These critics, I will suggest, argue from a number of assumptions that are confused or false. The satisfactory minimum that choosers in the original position – employing the maximin rule – seek to achieve is not a minimum level of primary goods, nor is the satisfactory minimum sought under the maximin rule supplied by the difference principle. I will argue that the maximin argument is more robust than has generally been recognized and that this argument performs a number of important functions in clarifying the nature and implications of Rawls's argument for justice as fairness.