 An Arrow security purchased or sold at date "t" is a contract promising to deliver one unit of income in one of the possible contingencies which can occur at date "t" + 1.If at each date-event there exists a complete set of such contracts, one for each contingency that can occur at the following date, individuals will trade these contracts in order to insure against future risks, targeting a desirable and budget feasible level of consumption in each state (i.e.consumption smoothing).