642 QUARTERLY JOURNAL OF ECONOMICS
by any one customer is known to all companies that sell to him. We think that this is an accurate description of procedures on at least some insurance markets. Many insurance policies specify either that they are not in force if there is another policy or that they insure against only the first, say, $1,000 of losses suffered. That is, instead of being a simple bet for or against the occurrence of a particular event, an insurance policy is a commitment on the part of the company to restore at least partially the losses brought about by the occurrence of that event.