Department or Program


Additional Department or Program (if any)


Primary Wellesley Thesis Advisor

Prof. Casey Rothschild

Additional Advisor(s)

Prof. Susan Skeath

Additional Advisor

Prof. Stanley Chang


A "tontine" is a special kind of annuity in which all participants contribute equally to a subscription pool, and a fixed percent of the total capital raised is distributed equally among surviving nominees every year. In this paper, we examine the adverse selection in the Irish tontines of 1773, 1775 and 1777 because of the presence of a group of speculative investors, namely a group of Genevan bankers. These Genevan investors purportedly cherry picked nominees with greater expected longevity. Their existence allows us to study a rather unconventional aspect of adverse selection, which arises from the informational asymmetry among different types of buyers. Using a newly compiled data set on the nominees and their subsequent mortality, we estimate that these Genevan investors earned on average 8.5% more per share than the other subscribers of the Irish tontines. The result suggests that speculative investors with access to superior information may earn higher returns at the expense of average investors, a phenomenon implicit but difficult to quantify in other insurance markets.