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Contributions to Insurance Economics pp 3–23Cite as

Economic Theory of Risk Exchanges: A Review

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Part of the book series: Huebner International Series on Risk, Insurance and Economic Security ((HSRI,volume 13))

Abstract

This paper reviews the economic theory of risk-sharing. We focus on the link between models with a complete set of markets for contingent claims and the theory of optimal insurance. Accordingly, an insurance contract can be viewed as a bundle of contingent goods. Transaction costs are shown to be the driving force for deductibles. Coinsurance can be due to either insurers’ risk aversion or nonlinearity in administrative costs. We conclude that insurance markets seem to be inefficient in that they do not satisfy the mutuality principle, a property of efficient contingent allocations.

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Author information

Authors and Affiliations

  1. CORE and Groupe HEC, USA

    Christian Gollier

Authors
  1. Christian Gollier
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Editor information

Editors and Affiliations

  1. Université de Montréal, Canada

    Georges Dionne

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© 1992 Springer Science+Business Media New York

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Gollier, C. (1992). Economic Theory of Risk Exchanges: A Review. In: Dionne, G. (eds) Contributions to Insurance Economics. Huebner International Series on Risk, Insurance and Economic Security, vol 13. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-1168-5_1

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  • DOI: https://doi.org/10.1007/978-94-017-1168-5_1

  • Publisher Name: Springer, Dordrecht

  • Print ISBN: 978-90-481-5788-4

  • Online ISBN: 978-94-017-1168-5

  • eBook Packages: Springer Book Archive

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