Composing Contracts:An Adventure in Financial Engineering

Financial and insurance contracts do not sound like promis-
ing territory for functional programming and formal seman-
tics, but in fact we have discovered that insights from pro-
gramming languages bear directly on the complex subject
of describing and valuing a large class of contracts.
We introduce a combinator library that allows us to de-
scribe such contracts precisely, and a compositional denota-
tional semantics that says what such contracts are worth.
We sketch an implementation of our combinator library in
Haskell. Interestingly, lazy evaluation plays a crucial role.