A Simple Unifying Framework for Categorizing Disparate Risk Transactions: Securities Investments, Insurance, Gambling, and Derivative Contracts Article
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Recommended Citation
Will Bunting, A Simple Unifying Framework for Categorizing Disparate Risk Transactions: Securities Investments, Insurance, Gambling, and Derivative Contracts, 25 U. Pa. J. Bus. L. 295 (2023)Clicking on the button will copy the full recommended citation.
The Article proceeds as follows: Part II examines how the law defines the following three risk transactions: (1) securities investments, (2) insurance, and (3) gambling. Part III introduces a theoretical model of bilateral risk transactions and applies this model to the three different types of risk transactions surveyed in Part II. Part III introduces three baseline models of bilateral risk transaction: (1) bilateral risk transfer, (2) bilateral risk creation, and (3) bilateral risk destruction and extends these models to include two additional variables: (1) endogenous risk, and (2) risk mitigation. The addition of these two variables narrows the broad definition of a bilateral risk transaction to include the three risk transactions examined in Part II. Other types of bilateral risk transactions are also considered, including derivative contracts. Highlighting two main regulatory concerns in connection with bilateral risk transactions, (1) moral hazard or fraud, and (2) risk mitigation, Part IV summarizes how the current regulatory environment addresses these two concerns and explores possible regulatory gaps suggested by the baseline models.