Informational Asymmetriesin Retroactive Insurance: Authors' Reply
回应Smith和Witt的评论，讨论追溯保险中信息与交易成本的重要性，并分析税收套利在MGM火灾事件前后的激励作用，认为税收套利不足以解释追溯保险交易。
We would like to thank Professors Smith and Witt (S-W) for their interesting commentary on our work. We concur with S-W that the ideas presented in our article [5] concerning the importance of information and transaction costs tend to reinforce rather than contradict, the tax arbitrage argument presented in their earlier article [3]. The main difference is with regards to estimates of the size of the alternative effects. The difference on this point is substantial and we feel that the arguments made in the S-W comment are not valid criticisms for a number of reasons that we outline in this reply. The primary difference between the parties is in determining whether tax arbitrage provides sufficient incentive to undertake the transaction. The two parties S-W and Venezian and Fields (V-F) disagree as to what assumptions are appropriate in determining the economic feasibility of the contract. To determine which argument is correct it is necessary to examine the assumptions made by both parties to see which set is most likely to produce an accurate prediction. S-W argue that tax arbitrage is sufficient while V-F argue that under a set of assumptions typical for the industry during the period of time that the MGM fire occurred tax arbitrage alone does not provide enough incentive for the transaction. Since the time of the MGM fire the Tax Reform Act of 1986 (TRA-86) has substantially changed the incentives for retroactive coverages. Even if tax arbitrage was relevant under the prior code it clearly is not significant enough to warrant the use of retroactive policies under the current act. The discussion below will examine the situation both pre and post the TRA-86, although failure of the tax arbitrage argument under the previous code also implies its failure under the current code. Several assumptions are necessary in estimating the return from tax