A Theory of Rational Demand for Index Insurance
研究发现，由于基差风险的存在，指数保险的理性需求与传统的损失补偿保险根本不同。对于极度风险厌恶者，最优需求为零，且需求与风险厌恶、财富和价格呈非单调关系。文章还提出了监控基差风险的简单比率，并解释了消费者对冲工具需求低迷是基差风险和沉没成本的理性反应。
Rational demand for index insurance products is shown to be fundamentally different to that for indemnity insurance products due to the presence of basis risk. In particular, optimal demand is zero for infinitely risk-averse individuals, and is nonmonotonic in risk aversion, wealth, and price. For a given belief, upper bounds are derived for the optimal demand from risk-averse and decreasing absolute risk-averse decision makers. A simple ratio for monitoring basis risk is presented and applied to explain the low level of demand for consumer hedging instruments as a rational response to deadweight costs and basis risk.