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Stuart_Armstrong comments on Systemic risk: a moral tale of ten insurance companies - Less Wrong Discussion
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Comments (18)
I knew the result; it just felt good to have a clear model :-)
It becomes even clearer if, post-diversification, instead of 10 insurance companies which are absolutely identical you just have one. In this case that one company internalizes the benefits of diversification while it's obvious that the industry composed now of a single company has no diversification at all.