Spatio-temporal risk sharing and transfer: A unified theory of multi-period decentralized insurances and annuities

Abstract

Two distinct strands of research focus on decentralized risk sharing plans. One strand centers on classic risk sharing and decentralized insurance, including peer-to-peer insurance, mutual aid, and DeFi insurance. The other explores decentralized annuities, such as tontine and group self-annuitization. Despite their disparate development paths, both involve decentralized risk sharing and transfer among participants. This paper aims to unify these domains by extending a theory of decentralized insurance to encompass multi-period decentralized insurances and decentralized annuities. The framework illuminates connections between spatial risk sharing and intertemporal risk transfer, and enables economic analysis of diverse scheme designs. The paper also provides a comprehensive review of various notions of temporal and spatial actuarial fairness, elucidating how different designs emerge from these distinct notions.