The insurance situation in which an enormous risk is insured by a number of insurance companies is modeled through a cooperative TU game, the so-called co-insurance game, first introduced in Fragnelli and Marina (2004). In this paper we present certain conditions on the parameters of the model that guarantee the 1-convexity property of co-insurance games which in turn ensures the nonemptiness of the core and the linearity of the nucleolus as a function of the variable premium. Further we reveal conditions when a co-insurance game is representable in the form of a veto-removed game and present an efficient final algorithm for computing the nucleolus of a veto-removed game.
- Cooperative game
- Insurance situation
Driessen, T., Fragnelli, V., Katsev, I. V., & Khmelnitskaya, A. B. (2011). On 1-convexity and nucleolus of co-insurance games. Insurance: mathematics & economics, 48(2), 217-225. https://doi.org/10.1016/j.insmatheco.2010.10.009