Saturday 16 November 2013

A Scientist Wants To Issue A Bond That Pays Big Once We Find Alien Life

aliens
Flickr/interdimensionalguardians
In modern finance, you can hedge against anything.
But the market for hedging against alien invasions is pretty thin.
Marginal Revolution's Tyler Cowen pointed us to an interesting proposal addressing the matter.
In an article for the Journal of the British Interplanetary Society, Jacob Haqq-Misra of the Blue Marble Space Institute of Science proposes a novel way to insure against the coming close encounter, while also helping fund the search for extraterrestrial intelligence. 
He proposes a bond which pays out when extraterrestrial life is proved to exist by researchers on earth. It would be a "lottery bond," which is a security usually issued to fund projects when the issuer foresees low demand for the bonds. In order to drum up demand, some randomly selected bonds within the issue are redeemed at a higher value than the face value of the bond once the project is completed; this enhances the value of the bond.

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