14d. Distortions and Spectral Risk Measures
Channel: Stephen Mildenhall
Date: 06/03/2023

This video introduces the idea of ask prices and bid prices for insurers. Underwriters quote their ask price for insurance. But risk financing accepts bid prices for hedging securities. The bid price is less than the ask price. There are information-related reasons for these differences. They help explain why reinsurance is costly. Link to Jupyter notebook on Colab: https://colab.research.google.com/drive/1EGqhAMsdGlGOg52GVasuwYMJ489uxsZx?usp=sharing.