Post by Sapphire Capital on Aug 28, 2008 19:50:05 GMT 4
Voting Over Informal Risk-Sharing Rules
Stefan Ambec
National Institute for Agricultural Research (INRA) - GAEL
Journal of African Economies, Vol. 17, Issue 4, pp. 635-659, 2008
Abstract:
This paper posits a new approach to informal risk-sharing in developing countries inspired by anthropological studies. A risk-sharing rule emerges as a collective choice which is enforced through peer-pressure. I determine the elected rules and the level of compliance with these rules. Full risk-sharing is achieved only if everybody complies. Partial risk-sharing arises more often with full or partial compliance. In many cases, a majority of people vote for and comply with the risk-sharing rule that maximises their own expected payoff. Yet a minority of people might comply with a rule which is detrimental to them.
papers.ssrn.com/sol3/papers.cfm?abstract_id=1194061
Stefan Ambec
National Institute for Agricultural Research (INRA) - GAEL
Journal of African Economies, Vol. 17, Issue 4, pp. 635-659, 2008
Abstract:
This paper posits a new approach to informal risk-sharing in developing countries inspired by anthropological studies. A risk-sharing rule emerges as a collective choice which is enforced through peer-pressure. I determine the elected rules and the level of compliance with these rules. Full risk-sharing is achieved only if everybody complies. Partial risk-sharing arises more often with full or partial compliance. In many cases, a majority of people vote for and comply with the risk-sharing rule that maximises their own expected payoff. Yet a minority of people might comply with a rule which is detrimental to them.
papers.ssrn.com/sol3/papers.cfm?abstract_id=1194061