Development of Utility Function for Life Insurance Buyers in the Indian Market

<div align="justify">Insurance as a financial instrument has been used for a long time. The dramatic increase in competition within the insurance sector (in terms of providers coupled with awareness for the need for insurance) has concomitantly resulted in more policy options being available in the market. The insurance seller needs to know the buyers preference for an insurance product accurately. Based on such multi-criterion decision-making, we use a logarithmic goal programming method to develop a linear utility model. The model is then used to develop a ready reckoner for policies that will aid investors in comparing them across various attributes</div>

Enrolment in Micro Life and Health Insurance: Evidences from Sri Lanka

Microinsurance is an emerging concept protecting households from the potentially catastrophic expenditures associated with family related shocks. Therefore, this paper presents evidence on the determinants of insurance participation using probit models on household survey data from Sri Lanka, conditional on household's microfinance institution enrolment. Further, we employ multivariate probit regressions to analyse factors affecting the participation in different types of insurance. We find that the household’s experience of a family related shock is positively associated with the participation in micro health insurance schemes under study. There is strong evidence that microinsurance has not yet succeeded in proportionately reaching the most vulnerable households. Notably, education of the household head is a strong determinant of microinsurance participation.microinsurance, household behaviour, Sri Lanka

Rainfall index insurance in India

This thesis provides three works which each contribute to understanding of the promising yet struggling market for rainfall index insurance in India. The first chapter contains an analysis of the willingness-to-pay (WTP) for rainfall insurance by poor farmers in Gujarat, India. It develops a theoretical model to predict individual WTP and contrasts it with emprical estimates of WTP using the Becker-DeGroot-Marshalk (BDM) mechanism. We find that BDM works well as a predictor of WTP, but that our model significantly overestimates WTP. The second chapter seeks to provide a possible explanation for demand being lower than theoretical predictions by looking at the dynamics of insurance demand. Using a panel dataset of insurance purchasers in India, it shows that people who receive an insurance payout are 9-22% more likely to purchase insurance the following year. The results are consistent with a dynamic model of insurance demand featuring loss aversion, in which receiving an insurance payout shifts the reference point such that people become more risk averse the following season. I provide evidence against other possible explanations, such as increased trust and learning about insurance, and direct effects of bad weather. The final chapter explores the possibility that combining rainfall insurance with savings may result in a more attractive financial product than insurance on its own. We conduct a laboratory experiment with Indian farmers that uses the BDM mechanism to assess the valuation of various insurance/savings combinations, which we title WISAs (Weather Insured Savings Accounts). We find that, contrary to theoretical predictions, most people prefer both pure savings and pure insurance to any combination of the two. This paper hopefully provides valuable contibutions to solving the puzzle of how to shield poor farmers from uncertain rainfall

Buyers’ Alliances for Bargaining Power

We provide a novel explanation as to why forming an alliance of buyers (or sellers) across separate markets can be advantageous when input prices are determined by bargaining. Our explanation helps to understand the prevalence of buyer cooperatives among small and medium sized firms. ZUSAMMENFASSUNG - (Verhandlungsmacht durch Käuferkooperationen) Dieses Papier entwickelt eine neue Erklärung dafür, warum Zusammenschlüsse zwischen Käufern (oder Verkäufern), die in unterschiedlichen Märkten aktiv sind, deren Verhandlungsmacht stärken können. Unser Ansatz kann unter anderem erklären, warum sich kleinere und mittlere Unternehmen oft zu Einkaufsgenossenschaften zusammenschließen.Nash bargaining solution, alternating-offer bargaining, bargaining power, buyer power, cooperatives, input markets.

Communal Responsibility and the Coexistence of Money and Credit under Anonymous Matching

Communal responsibility, a medieval institution studied by Greif (2006), supported the use of credit among European merchants in the absence of modern enforcement technologies. This paper shows how this mechanism helps to overcome enforcement problems in anonymous buyer/seller transactions. In a village economy version of the Lagos and Wright (2005) model, agents trading anonymously in decentralized markets can be identified by their citizenship and thus be held liable for each other. Enforceability within each village's centralized afternoon market ensures collateralization of credit in decentralized markets. In the resulting equilibrium, money and credit coexist in decentralized markets if the use of credit is costly. Our analysis easily extends itself to other payment systems like credit cards that provide a group identity to otherwise anonymous agents.Communal responsibility, anonymous matching, money demand, credit, bills of exchange

Determinants and Consequences of Land Sales Market Participation: Panel Evidence from India

Although opinions on impacts of land market transfers are sharply divided, few studies explore the welfare- and productivity impact of land markets on a larger scale. We use a large Indian panel spanning almost 20 years, together with a climatic shock (rainfall) indicator, to assess the productivity- and equity-impact of market-mediated land transfers (sale and purchase) as compared to non-market ones (inheritance). While frequent shocks increase land market activity, an effect that is mitigated by presence of safety nets and banks- land sales markets improved productivity and helped purchasers, many of them formerly landless, to accumulate non-land assets and significantly enhance their welfare.Land Economics/Use,

Real economy causes of the Great Deprivation of early 21st Century

The American economy has undergone a dramatic structural change in the first decade of the 21st Century. The real-economy causes of this transformation, and their expression via the real estate market and its financial derivatives’ market, and their final manifestation in world financial markets, is explained using traditional economic theory. A three-sector Walrasian general equilibrium model, and a non-Walrasian temporary equilibrium model with fixed prices and quantity constraints, are both utilized to explain the real-economy causes of the observed stylized facts. Some remedies that will likely work, and ones that will not, are also identified. (95 words)financial crisis, credit crunch, mortgage backed securities, fiscal policy, monetary policy, the U.S. economy, outsourcing, international capital mobility

Rural Financial Markets in Developing Countries

This review examines portions of the vast literature on rural financial markets and household behavior in the face of risk and uncertainty. We place particular emphasis on studying the important role of financial intermediaries, competition and regulation in shaping the changing structure and organization of rural markets, rather than on household strategies and bilateral contracting. Our goal is to provide a framework within which the evolution of financial intermediation in rural economies can be understood.Rural Finance, Financial Intermediation, Agricultural Credit

Land Acquisition: Fragmentation, Political Intervention and Holdout

This paper provides a theory of holdout based on the landowners' inability to manage large sums of money and consequent lack of consumption smoothing in case of sale. We find that under some reasonable conditions fragmentation increases holdout and moreover, this happens if and only if large landowners are relatively more willing to sale. Turning to the effects of politicization, we find that voice coupled with collective bargaining increases efficiency provided fragmentation is severe. Further, whether there is political intervention or not depends on the political maturity of the landowners, i.e. if they already have voice or not.Land acquisition; holdout; fragmentation; politics; voice; collective bargaining.