The Birth of Insurance Contracts - The Ataturk Institute for Modern ...

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[29] Townsend, R. M. “Optimal Contracts and Competitive Markets with Costly State Verification”. Journal of Economic Theory, 21.2 (1979): 265-293. [30] Townsend, R. M. “Optimal Multiperiod Contracts and the Gain from Enduring Relationships under Private Information.” Journal of Political Economy, 90.6 (1982): 1116-86. [31] Williamson, O.E. “The New Institutional Economics: Taking Stock, Looking Ahead.” Journal of Economic Literature, 38 (2000): 595-613. [32] Zingales, L. “In Search of New Foundations.” The Journal of Finance, LV.4 (2000): 1623- 1653. 34
FIGURE 1 (Hidden Information, k1 = 0, Two-side Risk Aversion ) c2(x) ✻ ✛ ✛ ❆ ✲ ❄ ❆ ❚ ❩❩ ❩ ❚ ✉ ❚ sea loan: τ(y) = y ❅❚ ❏❏ ❅❅ ❏ ❏ ❭ ❏ ❭ ❏ ❭ ❭ ❭ ❭ ❧ ❧ ❧ ❩ ❩ ❩P C2(12th − 13th) ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡✡ CC ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡ ✡✡ ❏❏ ❏ ❏ ❏ ❏ ❡ ❡ ❡ ❧ ❧ ❧ ❧ ❩ ❩❩ ❍ ❍ ❍❛ ❛ ❛P C2(15 th ❩ τ(y) < y ❅ ❏ ❆ ❆ ❆ ) ✉ CC ′ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Agent 1(the merchant) Risk-averse (0,0) if x =¯x c1(y) (0,0) if x =x c1(y) k2 − k + x ✔ ✔ c2(y) Agent 2 k2 − k + y k2 (0,0) (the financier) c1(x) Risk-averse //////////////////////// //////////////////////// //////////////////////// //////////////////////// //////////////////////// Noncontractible area //////////////////////// //////////////////////// //////////////////////// //////////////////////// ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ ♣ A 35
Page 1 and 2: 1 Introduction The Birth of Insuran
Page 3 and 4: of hostile people, and to the inves
Page 5 and 6: utility from second-date consumptio
Page 7 and 8: in his enterity. In return for some
Page 9 and 10: ci(s) ≥ 0 ∀i, ∀s (3) ci(s)
Page 11 and 12: financier for the entire capital re
Page 13 and 14: power U 2. 10 It is worth to note,
Page 15 and 16: of budget constraints (k1 = 0). How
Page 17 and 18: project is highly costly and risky
Page 19 and 20: parties commit part of their wealth
Page 21 and 22: commenda) because the high risk and
Page 23 and 24: the agents’ ability to diversify,
Page 25 and 26: It is proved below that at a soluti
Page 27 and 28: Show that dc2(y) d(k2−k) = −
Page 29 and 30: Program 3 is concave so that Kuhn-T
Page 31 and 32: When the entrepreneur lacks the wea
Page 33: [10] González de Lara, Y. “The S
Page 37: c1(y) ✛ FIGURE 5 (k1 > k, Two-sid

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