Differential Asset Valuation in the Medieval Post-Talmudic Legal Literature

This study evaluates the extent to which the asset valuation arguments raised by medieval post-Talmudic legal scholars are consistent with modern contingent claims analysis. In particular, this study evaluates the arguments proposed by these scholars in order to rationalize the Talmud's differential valuation of the same asset by multiple claimants. Modern contingent claims analysis is able to explain differential valuation by invoking market imperfections such as transactions costs and asymmetric information. We conjecture that market imperfections lie behind the Talmud's differential valuation of the kethubah. This study finds that although some post-Talmudic scholars—notably Rashi, Rashbam, and Rosh—can be interpreted as raising transactions costs and asymmetric information arguments to rationalize differential valuation of the kethubah, their lines of reasoning are typically included as part of a broader set of less convincing arguments. We argue that this mixture of deep insights into asset valuation and abstruse logic is likely a continuation of Talmudic ambivalence to the valuation of non—human capital, an ambivalence induced by the biblical prohibition against interest.