Bet against yourself: integrating insurance and entrepreneurship

Marian Eabrasu ()
Additional contact information
Marian Eabrasu: Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School

Post-Print from HAL

Abstract: This paper revisits and fine-tunes a spin-off from Knight's (1921, Risk, Uncertainty and Profit) influential distinction between risk (‘probability of unknown events') and uncertainty (‘unquantifiable randomness'): the contrast between actuarial institutions and entrepreneurship. It contends that this opposition is not exclusive and argues that the act of insurance does not automatically reduce entrepreneurial profits. To maintain this claim, the paper emphasizes hedging and, more specifically, draws on an innovative actuarial scheme – parametric (or index-based) insurance – which, unlike indemnity-based insurance, does not rely on a damage assessment but indemnifies the policyholder according to the variation of an index. This argument sheds new light on the function habitually assigned to actuarial institutions, amends the theory of entrepreneurial profits, and integrates hedging within entrepreneurial judgment.

Keywords: Hedging; Index-based insurance; Knight; Risk; Uncertainty (search for similar items in EconPapers)
Date: 2021-05-25
References: Add references at CitEc
Citations:

Published in Journal of Institutional Economics, 2021, 17 (6), pp.959-972. ⟨10.1017/S1744137421000394⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04999397

DOI: 10.1017/S1744137421000394

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().