ECONOMIC HISTORY - Contracts, Institutions, and Markets in Historical Perspective

The rise of markets, as well as the development of contracts, institutions, and social norms that enable mutually beneficial transactions among agents, are one of the central themes in the literature on long-term economic growth.

This project contributes to this literature by studying the invention and development of marine insurance contracts in medieval Italy and their subsequent spread all over Europe. It brings the economic approach to previously unexplored historical data housed in archives in Florence, Genoa, Pisa, Palermo, Prato, and Venice.

The interest in the historical origin and development of marine insurance contracts is twofold. First, marine insurance contracts are the "parents" of all the other insurance contracts (e.g., fire, life, health, etc) that were developed in subsequent centuries to cope with various sources of risk. Second, their invention, as well as other innovations in business practices in the Middle Ages, contributed to the growth of international trade in subsequent centuries.

The key novelty of the project stems from combining contract theory with information from thousands of insurance contracts between 1300 and 1550 to explain why marine insurance developed in medieval Italy and then Europe, to study the empirical determinants of insurance contracts in medieval Italy, and to analyze how medieval merchants coped with adverse selection and moral hazard problems.