Abstract

In this talk, we give an overview of some recent results on decentralized risk-sharing, which is an alternative for the centralized insurance approach. We consider risk-sharing pools where each participant is compensated from the pool for his loss and pays in return an ex-post contribution to the pool. The contributions of the participants follow from an appropriate risk-sharing rule, which is chosen such that the pool is self-financing. Decentralized risk-sharing revives early forms of mutual insurance and has been applied for centuries in traditional communities. The recent interest in a sharing economy, collaborative consumption and decentralized finance, together with recent advances in technology have made decentralized risk-sharing a viable candidate to disrupt the traditional insurance sector. We introduce and discuss a list of relevant properties of risk-sharing rules. A number of candidate risk-sharing rules are considered, including the simple uniform risk-sharing rule, as well as the conditional mean risk-sharing rule and the quantile risk-sharing rule. Their compliance with the proposed properties is investigated. Also, axiomatic characterizations of the above-mentioned risk-sharing rules are considered.