A theory of rational demand for index insurance

Rational demand for hedging products, where there is a risk of contractual nonperformance, is fundamentally different to that for indemnity insurance. In particular, optimal demand is zero for infinitely risk averse individuals, and is nonmonotonic in risk aversion, wealth and price. For commonly...

Full description

Bibliographic Details
Main Author: Clarke, D
Format: Working paper
Published: University of Oxford 2011