Derivatives activity, motivated by risk-sharing, can breed risk-taking. Bad news about the risk of the asset underlying the derivative increases the expected liability of a protection seller and undermines her risk-prevention incentives. This limits risk-sharing, and may create endogenous...

Within the context of expected utility and in a discrete loss setting, we provide a complete account of the demand for insurance by strictly-risk averse agents and risk-neutral firms when they enjoy limited liability. When exposed to a bankrupting, binary loss and under actuarially fair prices,...

Kenneth Arrow and Karl Borch published several important articles in the early 1960s that can be viewed as the beginning of modern economic analysis of insurance activity. This chapter reviews the main theoretical and empirical contributions in insurance economics since that time. The review...

We analyze optimal hedging contracts and show that although hedging aims at sharing risk, it can lead to more risk-taking. News implying that a hedge is likely to be loss-making undermines the risk-prevention incentives of the protection seller. This incentive problem limits the capacity to...

Modern society mitigates and transfers risks in a variety of ways, which range from catastrophe prevention and insurance solutions through to injustices of a minor and inconspicuous nature. We illustrate that the measures taken depend on the uncertainty about the risks in question, and involve...

The article presents the initial proposal for the group risk measurement based on the comparison of two interconnected sets of webs. The risk scalar has been presented both for each separated subsidiary as well as for the group itself. It was shown the risk profile of the group could be...

Im Zug der Verbreitung von Mikrokrediten und Mikrosparprodukten werden seit ungefähr einem Jahrzehnt auch Versicherungen an einkommensschwache Haushalte in Entwicklungs- und Schwellenländern verkauft. Es besteht die Hoffnung, weite Teile der Bevölkerung, denen ein Zugang zu staatlichem...

Within the context of a competitive insurance market, this paper examines the impact of ambiguity on the behavior of buyers and sellers. Ambiguity is described through a probability measure on an extended state space that includes extra ambiguous states. It is shown that if insurers face the...

We analyse the decision of an agent to invest in new industrial activities the con- sequences of which on people's health and the environment are initially unknown. The agent does not have the possibility of delaying her/his investment but s/he gets the opportunity to acquire information in...