A Better Trigger: Indices for Insurance
研究了指数触发机制在保险中的应用，通过分析基差风险对二元和多值指数进行排序，为风险厌恶个体和异质群体选择最优指数提供方法，并指出损失与指数的高相关性并不必然意味着更好的指数。
Abstract Index triggers have enabled the extension of insurance to a wide range of risks, by providing a simple mechanism to determine payment. However, the resulting coverage generates basis risk, the variability over time in the level of insurance payouts relative to the level of losses. We analyze basis risk to rank binary and multivalue indices for any risk‐averse individual. Our ranking provides methods to select an index that is optimal for a heterogeneous group and illustrates that higher correlation between loss and index, does not necessarily equate to a better index.