Risk and Incentives in the Iska Contract

JUDAISM AND ECONOMICS, Aaron Levine, ed., Oxford University Press, Forthcoming

Posted: 25 Mar 2010

See all articles by Jeffrey L. Callen

Jeffrey L. Callen

University of Toronto - Rotman School of Management

Date Written: March, 18 2010

Abstract

The Iska is a joint venture involving a silent partner who provides financing and an active partner who provides labor services and who may or may not participate in the financing. Most of the discussion surrounding the contractual features of the Iska in Talmudic and medieval post-Talmudic sources revolves around the issue of Rabbinically prohibited interest. This study shows that the contractual features of the Iska also raised deeper issues of risk sharing and shirking in the Talmudic and medieval post-Talmudic literatures, issues that are at the heart of the modern economics contracting literature.

Keywords: Iska, Talmud, joint ventures, compensation

JEL Classification: B15

Suggested Citation

Callen, Jeffrey L., Risk and Incentives in the Iska Contract (March, 18 2010). JUDAISM AND ECONOMICS, Aaron Levine, ed., Oxford University Press, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1574143

Jeffrey L. Callen (Contact Author)

University of Toronto - Rotman School of Management ( email )

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