Mutual Insurance Networks in Communities
AbstractWe study the formation of mutual insurance networks in a model where every agent who obtains more resources gives a fixed amount of resources to all agents who have obtained less resources. The low resource agent must be directly linked to the high resource agent to receive this transfer. We identify the pairwise stable networks and efficient networks. Then, we extend our model to situations where agents differ in their generosity with regard to the transfer scheme. We show that there exist conditions under which in a pairwise stable network agents who provide the same level of transfers are linked together, while there are no links between agents who provide high transfers and agents who provide low transfers.
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Date of creation: 21 Dec 2012
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Mutual insurance networks; Pairwise stable networks; Effi cient networks;
Other versions of this item:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-07 (All new papers)
- NEP-GTH-2013-01-07 (Game Theory)
- NEP-IAS-2013-01-07 (Insurance Economics)
- NEP-MIC-2013-01-07 (Microeconomics)
- NEP-NET-2013-01-07 (Network Economics)
- NEP-SOC-2013-01-07 (Social Norms & Social Capital)
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