A Geologic-Actuarial Approach for Insuring the Extraction Tasks of Non-Renewable Resources by One and Two Agents

This work uses classic stochastic dynamic programming techniques to determine the equivalence premium that each of two extraction agents a non-renewable natural resource must pay an insurer cover risk pore explodes. We use statistical and geological methods calibrate time-until-failure distribution status for agent couple simple approximation scheme with actuarial standard Bühlmann’s recommendations charge extracting variance premium, while earns return on its investment at risk. test our analytical results through Monte Carlo simulations verify probability ruin does not exceed certain predetermined level.