In article Pine.SOL.4.58.0312041611390.24827
@timepilot.gpcc.itd.umich.edu, says...
On Thu, 4 Dec 2003, steve sullivan wrote:

When one buys a rod that retails for $900 and it has a uncondtional
warranty, having to pay $100 if anything happens is insane.

Buying a rod for $900 is insane (BTW I might be insane).

The very idea of an unconditional warranty is insane (or more likely
economically untenable).

Paying $100 for the labor and material required to fix any high quality
rod is reasonable.


That's pretty much what you're doing though. The rod company is just
charging you up front for the cost of the replacement rod(s) that they
assume you will need someday.

For the math/statistics geeks in the audience, define a random variable
X = cost of servicing the warranty on a rod (which might involve some
complicated formulas to account for the time value of the money involved
and interest rates and such) and find the probability distribution for
X, which I will assume will be based on the Poisson distribution, and
then add the expected value E(X) onto the purchase price of the rod.

In other words, you aren't just paying for the rod, you are also paying
the premium on a lifetime insurance policy against breakage. It might
be nice if the rod companies would itemize the costs, and give the buyer
the option of not paying the insurance premium, or to pay a lower
premium in return for applying a deductible on any damage claims.

Kevin