This paper examines the impact of habit formation on the demand for life-contingent contracts in a life-cycle model. We derive an analytical solution for the optimal consumption, portfolio choice, and life insurance/annuity purchases. We illustrate the mechanism by which the consumption habit...

In this paper we propose a flexible framework for the design of weather index insurance (WII) based on penalized spline methods. The aim is to find the indemnity function which optimally characterizes the intricate relationship between agricultural production losses and weather variables and...