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Gift exchange anomaly: evidence from incentives vis-�-vis performance of Islamic insurance operators

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Abstract

This article provides evidence on the gift exchange anomaly using standard field data on the performance of Islamic insurance ( takaful ) operators (TOs). Takaful is a type of mutual insurance where policyholders insure each other and hire an operator to manage operations against a hybrid of financial incentives. These incentives include an upfront agency fee, which is found to have an inverted U-shaped relationship with performance of TOs. We use our results to identify an optimal hybrid contract for TO and find optimal agency fee as a percentage of net earned premium.

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  • H. Khan, 2015. "Gift exchange anomaly: evidence from incentives vis-�-vis performance of Islamic insurance operators," Applied Economics Letters, Taylor & Francis Journals, vol. 22(14), pages 1175-1178, September.
    • Handle: RePEc:taf:apeclt:v:22:y:2015:i:14:p:1175-1178
    DOI: 10.1080/13504851.2015.1016202
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    File URL: http://hdl.handle.net/10.1080/13504851.2015.1016202
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    Cited by:

    1. Hayat Khan, 2019. "A Nontechnical Guide on Optimal Incentives for Islamic Insurance Operators," JRFM, MDPI, vol. 12(3), pages 1-14, July.

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