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Markets in everything, joys of contradiction edition
First, engage a company to monitor your exercise regime and punish you financially if you fail; then, buy insurance against the risk of failure.
That's from Tim Harford, noting that the latter market is still a gleam in someone's eye.
Posted by Tyler Cowen on November 19, 2007 at 11:25 AM in Economics | Permalink
Comments
Do you remember the Stephen King story called "Quitters, Inc."?!?
Posted by: Jenny Davidson at Nov 19, 2007 11:59:08 AM
And then securitize the insurance.
Posted by: TJ at Nov 19, 2007 12:36:02 PM
Some people may have very weak self-control despite a financial commitment. Taking out insurance against the bond incents the insurer to cooperate with them towards the goal.
Posted by: guest at Nov 19, 2007 12:47:11 PM
You mean that you wouldn't be able to sue?
Posted by: Chris at Nov 19, 2007 12:49:46 PM
There's no peril that can be insured against here, and therefore no
insurable interest.
If failure of this sort could be insured against, then so could school
kids failing school courses. They certainly face long-run financial
consequences of failing in school, yet there is no insurance market here.
Maybe cracking a basic insurance book would be in order.
Harold D. Skipper and Kenneth Black on Life and Health Insurance is good.
Posted by: Bill Stepp at Nov 19, 2007 4:39:58 PM
Since some people will fail, and thus enable the company to keep the money minus overhead then the payback of sucess should increase above the money invested. If 100 people put up $1000 and 10 of them fail then the 90 that suceeded should get back ($1100 + interest) - expenses.
Posted by: LoneSnark at Nov 19, 2007 6:12:34 PM
How do they control if someone really achieved his or her goals? I would probably anticipate the possibility to save my money using a simple lie. Thus, the incentive doesn't work - and doesn't work from day one on.
Posted by: ThomasP at Nov 20, 2007 4:09:17 AM
Posted by: 翻译公司 at Feb 25, 2008 9:05:13 AM
Posted by: Alii at Apr 3, 2008 9:06:42 PM
