Riskless Society

DEFINITION of 'Riskless Society'

A fictional society in which the world markets become complete and sophisticated enough that every imaginable risk can be mitigated by insurance. The notion of the riskless society was deveopled by Dr. Kenneth Arrow and Gerard Debreu, which has led the way to further progress in the risk management sciences.

BREAKING DOWN 'Riskless Society'

The theories presented by Arrow and Debreu were based on an assumption of market equilibrium that stands in opposition to much of the empirical evidence the markets provide us with. Modern behavioral finance theory attempts to study markets under states of non-equilibrium.

Debreu won the Nobel Memorial Prize for this work in 1983. Since Arrow and Debreu's work was first published, the prevalence of financial derivatives products has grown exponentially.

RELATED TERMS
  1. John R. Hicks

    A British economist who received the 1972 Nobel Memorial Prize ...
  2. Building Society

    A type of financial institution that provides banking and other ...
  3. Social Sciences

    A group of academic disciplines that examine society and how ...
  4. Rate Of Adoption

    The number of members of a society who start using a new technology ...
  5. Plutonomy

    Economic growth that is powered and consumed by the wealthiest ...
  6. Checkless Society

    A hypothetical term that embraces the notion of a world that ...
Related Articles
  1. Options & Futures

    Nobel Winners Are Economic Prizes

    Before you try to profit from their theories, you should learn about the creators themselves.
  2. Investing Basics

    Modern Portfolio Theory vs. Behavioral Finance

    Modern portfolio theory and behavioral finance represent differing schools of thought that attempt to explain investor behavior. Perhaps the easiest way to think about their arguments and positions ...
  3. Economics

    5 Nobel Prize-Winning Economic Theories You Should Know About

    Here are 5 prize-winning economic theories that you’ll want to be familiar with.
  4. Stock Analysis

    Fox Goes Wild, Partners With National Geographic

    Twenty-First Century Fox (NASDAQ: FOXA) is sowing its wild oats, forming a for-profit joint venture with the National Geographic Society to create a new venue for the science, exploration, and ...
  5. Fundamental Analysis

    How Influential Economists Changed Our History

    Find out how these five groundbreaking thinkers laid our financial foundations.
  6. Investing Basics

    Understanding Notional Value

    This term is commonly used in the options, futures and currency markets because a very small amount of invested money can control a large position.
  7. Forex Strategies

    Trading Forex Trends With MACD And Moving Averages

    Although based on short-term trading, keeping the long-term picture in mind will help investors trade with the trend.
  8. Chart Advisor

    Bank of America Corporation

    For today's chart we've chosen to take a look at Bank of America Corporation (NYSE:BAC) because it is nearing the resistance of an influential Fibonacci Retracement level. As you can see from ...
  9. Investing Basics

    How To Become A Sophisticated Investor

    No one doubts the value and importance of investor education and sophistication, but many investors are not really all that sophisticated. Goldman Sachs was scrutinized for marketing complex ...
  10. Active Trading Fundamentals

    Weighted Moving Averages: The Basics

    We take a closer look at the linearly weighted moving average and the exponentially smoothed moving average.
RELATED FAQS
  1. In what types of societies does limited government work best?

    See what a society needs to function with a limited government, and how social cooperation can be achieved through voluntary ... Read Answer >>
  2. How is risk priced in the market?

    Read about some of the ways risk is priced in the market in areas such as insurance, consumer goods, investment assets and ... Read Answer >>
  3. What are some common markets where notional value is used?

    Find out more about the notional value of securities and which markets commonly use the notional value to indicate the total ... Read Answer >>
  4. You observe the following exchange rates in the following markets ...

    Free info on financial certification exams including study guides, exam questions, and much more! Read Answer >>
  5. What are some of the drawbacks of industrialization?

    Learn about the major drawbacks of industrialization, such as environmental damage, income inequality, overcrowding of cities, ... Read Answer >>
  6. How can I calculate funds from operation in Excel?

    Understand how the terms ''work in progress'' and ''work in process'' are used interchangeably to refer to items in the middle ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center