> Koushik Sekhar wrote: > > Should markets be priced assuming that nothing will go wrong ("random > > shocks") or should markets be priced assuming that something will go wrong ?
> Neither, obviously. Prices should reflect expected values - in this > case, disasters discounted by their probabilities. > Prof. Bryan Caplan But isn't this a key issue? How does one figure out discount for things like earthquakes, terrorism or other "disasters"? Fabio