In our example, the probability of fire was assumed to be 25%. So this insurance will be fair. And the absolute value of the slope of 선분AB is 1/3,which implies that this insurance is fair. This slope means the fair odds under the condition that probability of fire is 1/4 and probability of safety is 3/4. Based upon this fair insurance, the expected value of assets of the insured on 선분AB will be always $5 millions.
Since this insured is risk averse person, his or her best choice must be on point B.