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Sharing as risk pooling in a social dilemma experiment Ecology and Society
Cherry, Todd L.; Appalachian State University; Center for International Climate and Environmental Research (CICERO); cherrytl@appstate.edu; Howe, E. Lance; University of Alaska Anchorage; elhowe@uaa.alaska.edu; Murphy, James J.; University of Alaska Anchorage; Nankai University; Chapman University; murphy@uaa.alaska.edu.
In rural economies with missing or incomplete markets, idiosyncratic risk is frequently pooled through informal networks. Idiosyncratic shocks, however, are not limited to private goods but can also restrict an individual from partaking in or benefiting from a collective activity. In these situations, a group must decide whether to provide insurance to the affected member. We describe results of a laboratory experiment designed to test whether a simple sharing institution can sustain risk pooling in a social dilemma with idiosyncratic risk. We tested whether risk could be pooled without a commitment device and, separately, whether effective risk pooling induced greater cooperation in the social dilemma. We found that even in the absence of a commitment...
Tipo: Peer-Reviewed article Palavras-chave: Collective action; Experimental economics; Idiosyncratic risk; Income smoothing; Insurance; Lab experiment; Public goods; Resource sharing; Risk pooling; Social dilemma; Social-ecological systems; Team production.
Ano: 2015
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Risk Preferences and Demand for Insurance in Peru: A Field Experiment AgEcon
Galarza, Francisco B.; Carter, Michael R..
This paper reports the results of behavioral economic experiments conducted in Peru to examine the relationship amongst risk preferences, loan take-up, and insurance purchase decisions. This area-based yield insurance can help reduce people's vulnerability to large scale covariate shocks, and can also lower the loan default probability under extreme negative covariate shocks. In a context of collateralized formal credit markets, we provide suggestive evidence that insurance may help reduce the fear of losing collateral that prevents potential borrowers from taking loans. Framing these experiments to recreate a real life situation, we started with a Baseline Game where subjects had to choose between a fallback production project and an uninsured loan. We...
Tipo: Conference Paper or Presentation Palavras-chave: Area-yield insurance; Credit; Covariate risk; Idiosyncratic risk; Risk aversion; Experimental economics; Peru; Risk and Uncertainty; C93; D81.
Ano: 2010 URL: http://purl.umn.edu/61871
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STOCHASTIC WEALTH DYNAMICS AND RISK MANAGEMENT AMONG A POOR POPULATION AgEcon
Lybbert, Travis J.; Barrett, Christopher B.; Desta, Solomon; Coppock, D. Layne.
The literature on economic growth and development has focused considerable attention on questions of risk management and the possibility of multiple equilibria associated with poverty traps. We use herd history data collected among pastoralists in southern Ethiopia to study stochastic wealth dynamics among a very poor population. These data yield several novel findings. Although covariate rainfall shocks plainly matter, household-specific factors, including own herd size, account for most observed variability in wealth dynamics. Despite longstanding conventional wisdom about common property grazing lands, we find no statistical support for the tragedy of the commons hypothesis. It appears that past studies may have conflated costly self-insurance with...
Tipo: Working or Discussion Paper Palavras-chave: Common property; Covariate risk; Ethiopia; Idiosyncratic risk; Poverty traps; Social insurance; Risk and Uncertainty; O1; Q12.
Ano: 2002 URL: http://purl.umn.edu/14736
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