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Risk Pooling, Risk Preferences, and Social Networks

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  • Orazio Attanasio
  • Abigail Barr
  • Juan Camilo Cardenas
  • Garance Genicot
  • Costas Meghir

Abstract

Using data from an experiment conducted in 70 Colombian communities, we investigate who pools risk with whom when trust is crucial for enforcing risk pooling arrangements. We explore the roles played by risk attitudes and social networks. Both empirically and theoretically, we find that close friends and relatives group assortatively on risk attitudes and are more likely to join the same risk pooling group, while unfamiliar participants group less and rarely assort. These findings indicate that where there are advantages to grouping assortatively on risk attitudes those advantages may be inaccessible when trust is absent or low. (JEL C93, O12, O18, Z13)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

Volume (Year): 4 (2012)
Issue (Month): 2 (April)
Pages: 134-67

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Handle: RePEc:aea:aejapp:v:4:y:2012:i:2:p:134-67

Note: DOI: 10.1257/app.4.2.134
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Citations

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Cited by:
  1. Wendy Janssens & Berber Kramer, 2012. "The Social Dilemma of Microinsurance: A Framed Field Experiment on Free-Riding and Coordination," Tinbergen Institute Discussion Papers 12-145/V, Tinbergen Institute, revised 23 Jan 2014.
  2. Batista, Catia & Silverman, Dan & Yang, Dean, 2013. "Directed Giving: Evidence from an Inter-Household Transfer Experiment," IZA Discussion Papers 7629, Institute for the Study of Labor (IZA).
  3. repec:dgr:uvatin:2012145 is not listed on IDEAS
  4. Charness, Gary & Viceisza, Angelino, 2012. "Comprehension and Risk Elicitation in the Field: Evidence from Rural Senegal," University of California at Santa Barbara, Economics Working Paper Series qt5512d150, Department of Economics, UC Santa Barbara.
  5. Giné, Xavier & Karlan, Dean S., 2014. "Group versus individual liability: Short and long term evidence from Philippine microcredit lending groups," Journal of Development Economics, Elsevier, Elsevier, vol. 107(C), pages 65-83.
  6. Anderies, John M. & Janssen, Marco A. & Bousquet, François & Cardenas, Juan-Camilo & Castillo, Daniel & Lopez, Maria-Claudio & Tobias, Robert & Vollan, Björn & Wutich, Amber, 2011. "The challenge of understanding decisions in experimental studies of common pool resource governance," Ecological Economics, Elsevier, Elsevier, vol. 70(9), pages 1571-1579, July.
  7. Robinson, Jonathan, 2008. "Limited Insurance Within the Household: Evidence from a Field Experiment in Kenya," MPRA Paper 8314, University Library of Munich, Germany.
  8. Simone Gobien & Björn Vollan, 2013. "Playing with the social network: Social cohesion in resettled and non-resettled communities in Cambodia," MAGKS Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 201331, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  9. Baird, Timothy D. & Gray, Clark L., 2014. "Livelihood Diversification and Shifting Social Networks of Exchange: A Social Network Transition?," World Development, Elsevier, Elsevier, vol. 60(C), pages 14-30.
  10. Daniela Di Cagno & Emanuela Sciubba & Marco Spallone, 2012. "Choosing a gambling partner: testing a model of mutual insurance in the lab," Theory and Decision, Springer, Springer, vol. 72(4), pages 537-571, April.
  11. Fernando Jaramillo & Hubert Kempf & Fabien Moizeau, 2013. "Heterogeneity and the formation of risk - sharing coalitions," DOCUMENTOS DE TRABAJO 011013, UNIVERSIDAD DEL ROSARIO.
  12. Juan Cárdenas & Nicolas Roux & Christian Jaramillo & Luis Martinez, 2014. "Is it my money or not? An experiment on risk aversion and the house-money effect," Experimental Economics, Springer, Springer, vol. 17(1), pages 47-60, March.

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