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Smart contract tontines

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  • Mohamad Hassan Abou Daya
  • Carole Bernard

Abstract

When entering into a tontine, the value of the tontine for the participant highly depends on its composition (e.g. the age of the participants, the amount invested by each of them already invested in the tontine). However, participants subscribe to the scheme without any knowledge of either the composition of the tontine, or, in some cases, its exact payout scheme. Herein, we quantify the value of this information using certainty equivalents in the expected utility setting and a measure for model risk that allows us to obtain bounds on the tontine value subject to uncertainty in certain characteristics. We then propose a smart contract that offers full disclosure of information in a tontine. We discuss the practical implementation of such a tontine and present some new risks that could arise.

Suggested Citation

  • Mohamad Hassan Abou Daya & Carole Bernard, 2025. "Smart contract tontines," Applied Economics, Taylor & Francis Journals, vol. 57(46), pages 7495-7510, October.
    • Handle: RePEc:taf:applec:v:57:y:2025:i:46:p:7495-7510
    DOI: 10.1080/00036846.2024.2393446
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