Composing contracts: An adventure in financial engineering functional pearl

Financial and insurance contracts do not sound like promising territory for functional programming and formal semantics, but in fact we have discovere d that insights from programming languages bear directly on the complex sub ject of describing and valuing a large class of contracts. We introduce a combinator library that allows us to describe such contracts precisely, and a compositional denotational 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.