Gift exchange anomaly: evidence from incentives vis-�-vis performance of Islamic insurance operators

Hayat Khan
Authors registered in the RePEc Author Service: Ammad Khn

Applied Economics Letters, 2015, vol. 22, issue 14, 1175-1178

Abstract: This article provides evidence on the gift exchange anomaly using standard field data on the performance of Islamic insurance ( takaful ) operators (TOs). Takaful is a type of mutual insurance where policyholders insure each other and hire an operator to manage operations against a hybrid of financial incentives. These incentives include an upfront agency fee, which is found to have an inverted U-shaped relationship with performance of TOs. We use our results to identify an optimal hybrid contract for TO and find optimal agency fee as a percentage of net earned premium.

Date: 2015
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DOI: 10.1080/13504851.2015.1016202

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