EconSim
MicroeconomicsClassroom · multi-user

Insurance & Risk Pooling — The Risk Pool

Everyone faces the same random loss. Play one round going it alone, then one round sharing a common fund, and watch how pooling smooths who ends up wiped out.

You’ll learn: See that insurance doesn't reduce total losses — it spreads them, so no single person is wiped out — and why an emergency fund and insurance play different roles.

Teacher guide

Students will learn to

  • Feel how an uninsured random loss falls hard on whoever is unlucky.
  • See how a shared premium pool reimburses losers so everyone ends up near the same place.
  • Understand the law of large numbers: pooled losses are far more predictable per person than individual ones.

Before the session — ask

  • If there's a small chance of a big loss, would you rather risk it alone or pay a little to share it?
  • Does buying insurance make the group as a whole richer? If not, what does it do?

After the session — discuss

  • How different were people's outcomes in the uninsured round versus the pooled round?
  • Did the pool make the whole class richer, or just change who bore the loss?
  • When is an individual emergency fund enough, and when do you need collective insurance?

Timing

  • Briefing & the rules3–5 min
  • Uninsured & pooled rounds6–10 min
  • Debrief & discussion8–10 min

Run it with your class

Students join with a code or QR — no account needed. Teachers start a session from the dashboard.