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On Mutual Insurance


  • Ermoliev, Y.M.
  • Flam. S.D.


Owners of stochastic assets can pool their endowments to smoothen and insure individual payoffs across outcomes and time. We explore, in such a setting, how contingent shadow prices on aggregate resources can be used for three purposes: first, to design mutual contracts for risk averse agents; second, to quantify the malfunctioning of such contracts when there are risk lovers (or scale economies); and third, to estimate reasonable premiums for insurance offered by outside agents.

Suggested Citation

  • Ermoliev, Y.M. & Flam. S.D., 2000. "On Mutual Insurance," Norway; Department of Economics, University of Bergen 2299, Department of Economics, University of Bergen.
  • Handle: RePEc:fth:bereco:2299

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    References listed on IDEAS

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    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty


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