Insurance Regarding the Existence of an Individual’s Afterlife

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Under the rational choice model, decisions individuals make are based on perfect information. This implies that people do not undergo any risks or uncertainties when making a choice. However, religious choices of individuals cannot be based on perfect information, for there are no verified sources of information individuals can rely on whilst making religious choices. In other words, uncertainty and risk are important components of religious choice.

Rational choice in religious decisions is based on the fact that individuals maximize their expected utility in their afterlife by choosing an optimal level of faith. Faith acts as insurance regarding the existence of an individual’s afterlife, while also providing meaning to life before death. Therefore, the level of faith influences expected utility and acts an important component in the model. Meanwhile, maintaining faith also entails costs due to its uncertainty.

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This paper aims to build a rational model of religious choice based on uncertainty, and thus understand and explain certain religious behavior. More specifically, it aims to analyze certain decisions in faith that lead to higher motivations of participating in religious activities.

According to the model, benefits that religious faith provides to individuals will further increase the afterlife and lifetime utility. The term ‘faith ‘, in this paper indicates how much of a priority religion or God is to an individual, among other given things. In other words, faith is a means of measuring how attached one chooses to be with God, the expectations one has that God exists, or the importance religion has to the individual in making other nonreligious decisions.

The individual maximization problem involves choosing a certain level of faith subject to the expectations of the afterlife, the effect of faith on the quality of the life after death and the level of faith during one’s lifetime. This can be viewed as the utility theory, since it is similar to the standard insurance problem. Since the individual is subject to imperfect information of whether God exists or not, there will be two opposing states within the model, both in terms of probability.

This is the expected utility function used in the standard insurance problem. Assuming state 1 is where a fire does not occur, and state 2 is that where a fire occurs, individuals will pay the insurance premium and thus give up state 1 in order to reduce potential loss in the state where the fire actually occurs. The following mathematical model regarding the religious decisions of individuals follows a similar structure, with state 1 being the state at which one believes God exists and state 2 being the opposite, where there is no afterlife. The utility of both states come from the level of income.  

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