Individual, Co-Operative, and Competitive Pricing of Risks
In pursuing any economic task, one is bound to find that ‘success’ or ‘failure’ are not only a consequence of the actions taken but also depend to a great degree upon uncontrollable chance factors. It therefore seems a most natural definition of ‘risk’ to identify it with those chance factors which may be (but not necessarily are) working against the ‘economical zoon’. The terminology just used is misleading in as much as there is no absolute dichotomy between controllable and uncontrollable factors. In particular, every risk (equal uncontrollable chance factor) can still be managed in some way. It can be avoided, retained, reduced through preventive measures, transferred, neutralized or pooled (Williams and Heins, 1964). It is the task of risk management to choose which attitude to take towards a risk.
Unable to display preview. Download preview PDF.
- Allais, M. (1953), ‘Généralisation des théories de l’équilibre économique général et du rendement social au cas du risque’, Colloques internationaux du CNRS, Paris, pp. 81–109.Google Scholar
- Arrow, K. J. (1953), ‘Le Rôle de valeurs boursières pour la répartition la meilleure des risques’, Colloques internationaux du CNRS, Paris, pp. 41–8. English translation: ‘The Rôle of Securities in the Optimal Allocation of Risk-Bearing’, Rev. Econ. Stud. 1964, pp. 91–6.Google Scholar
- Arrow, K. J. and Debreu, G. (1954), ‘Existence of an Equilibrium for a Competitive Economy’, Econometrica, pp. 265–90.Google Scholar
- Borch, K. (1960), ‘The Safety Loading of Reinsurance Premiums’, Skandinavisk Aktuarietidskrift, pp. 163–84.Google Scholar
- Borch, K. (1962), ‘Equilibrium in a Reinsurance Market’, Econometrica, pp. 424–444.Google Scholar
- Debreu, G. (1959), Theory of Value, New York: John Wiley & Sons.Google Scholar
- Dreze, J. (1965), ‘Market Allocation under Uncertainty’, paper presented at the First World Congress of the Econometric Society, Rome.Google Scholar
- Nash, J. (1950), ‘The Bargaining Problem’, Econometrica, pp. 155–62.Google Scholar
- Neumann, J. von, and Morgenstem, O. (1944), Theory of Games and Economic Behavior, Princeton Univ. Press.Google Scholar
- Radner, R. (1965), ‘Competitive Equilibrium under Uncertainty’, paper presented at the First World Congress of the Econometric Society, Rome.Google Scholar
- Sharpe, W. F. (1964), ‘Capital Asset Prices: a Theory of Market Equilibrium under Conditions of Risk’, J. Finance, pp. 425–42.Google Scholar