Chris Kingston is Professor of Economics at Amherst College. 

Abstract:

This paper describes and analyzes the institutional changes which occurred in the marine insurance industry during the eighteenth and early nineteenth centuries. It uses a context-specific game-theoretic model and contemporary evidence to substantiate the hypothesis that the industry was characterized by two different possible equilibrium sets of institutions, each of which, once selected, was stable. Institutional change in the industry is interpreted as a path-dependent process in which exogenous shocks, caused primarily by the wars of the eighteenth century, periodically disturbed these equilibria, leading in some cases to transitions to new equilibria, and in others to endogenous institutional changes which led to the reinforcement and formalization of the existing equilibria.