This paper suggests insurance represents a quid pro quo transaction across states of the world and is purchased to transfer income to a state where it is more valued. It also suggests that gambling represent a similar quid pro quo transaction across states but that consumers gamble to transfer...

This paper suggests that insurance represents a quid pro quo transaction across states of the world and is purchased because consumers desire to transfer income to a state where it is more valued. Preferences for certainty have little to do with the demand for insurance, but uncertainty itself...