Voting Over Informal Risk-Sharing Rules

Posted: 4 Aug 2008

See all articles by Stefan Ambec

Stefan Ambec

National Institute for Agricultural Research (INRA) - GAEL

Date Written: August 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.

Keywords: H21, O12, O17

Suggested Citation

Ambec, Stefan, Voting Over Informal Risk-Sharing Rules (August 2008). Journal of African Economies, Vol. 17, Issue 4, pp. 635-659, 2008, Available at SSRN: https://ssrn.com/abstract=1194061 or http://dx.doi.org/ejn001

Stefan Ambec (Contact Author)

National Institute for Agricultural Research (INRA) - GAEL ( email )

BP 47
38040 Grenoble
France

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