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An Equilibrium Model of Rare-Event Premia and Its Implication for Option Smirks.

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10.1093/rfs/hhi011
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An Equilibrium Model of Rare-Event Premia and Its Implication for Option Smirks." Liu, Jun, Jun Pan and Tan Wang. Review of Financial Studies Vol. 18, No. 1 (2005): 131-164.


I visited South Africa in 1998 to learn more about the process of truth and reconciliation as an alternative to the model of revolutionary struggle described in chapter 1. Soon after my arrival, I found myself across the dinner table from an Afrikaner adviser to Thabo Mbeki and a member of parliament for the African National Congress (ANC) who had been imprisoned during the last years of apartheid. He was freed when the rapprochement talks began to negotiate the return of the ANC exiles, many of whom were under death sentence in absentia.


What did it mean for the victors of the cold war to describe its end as a victory for human rights? In their institutional outcomes we can see obvious similarities between the “third-wave” democratizations of the late twentieth century and an earlier “age” of democratic revolution.¹ But there was also an obvious distinction: the third wave of democratizations had mostly occurred without revolutionary violence. Was it a final victory or a final defeat for human rights that they were now disentangled from the inevitable cruelties of revolutionary struggle?

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