New risks seem to be an unavoidable in a period of rapid change. The last few decades have brought us the risks of global warming, nuclear meltdown, ozone depletion, failure of satellite launcher rockets, collision of supertankers, AIDS and Ebola. A key feature of a new risk, as opposed to an...

We study the introduction of new assets that are defined in expected values rather than state by state. Individual default emerges naturally in an economy where such assets are introduced without completing all contingency markets. We further provide conditions under which individual default is...