Abstract
PurposeThe purpose of this paper is to consider the problem of allocating responsibility for risk through a simple classroom vignette that illustrates some of the difficulties encountered in more complex real‐world scenarios.Design/methodology/approachAfter considering a number of ad hoc allocation methods, this study focuses on the Shapley and Aumann‐Shapley values from cooperative game theory.FindingsShows that the Aumann‐Shapley value provides a useful tool for allocating risk in a real‐world insurance context, and therefore may be used to distribute capital (surplus) and premium loadings.Originality/valueThe paper offers insights into both the challenges of the risk‐allocation problem and its proposed solutions.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
