Heterogeneity of Preferences, Limited Commitment and Coalitions Empirical Evidence on the Limits to Risk Sharing in Rural Pakistan
AbstractIn this paper, we study the determinants of the value of informal risk sharing groups. In particular, we look at the effects of heterogeneity of preferences and of limited commitment constraints that restrict feasible allocations differently if individuals can deviate form risk sharing agreements in coalitions or not. We test impirically several predictable implications in rural Pakistan taking into account the heterogeneity of households' preferences. Our results show that exogenous size of risk sharing groups can be rejected or that only imperfect risk sharing is obtained within the village because of limited commitment and because of the risk of coalition formation that needs to be deterred. ...French Abstract : L'auteur Ã©tudie les dÃ©terminants de la valeur du partage de risque informel dans un groupe. En particulier, il Ã©tudie les effets de l'hÃ©tÃ©rogÃ©nÃ©itÃ© des prÃ©fÃ©rences et de l'engagementlimitÃ© sur les limites au partage des risques. Plusieurs implications sur des donnÃ©es au Pakistan sont testÃ©es, en tenant compte de l'hÃ©tÃ©rogÃ©nÃ©itÃ© des prÃ©fÃ©rences des mÃ©nages. Les rÃ©sultats montrent qu'une taille, exogÃ¨ne des groupes de partage de risque peut-Ãªtre rejetÃ©e ou qu'un partage de risque imparfait est obtenu dans le village Ã cause de contraintes d'engagement limitÃ© et Ã cause du risque de formation de coalitions.
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Bibliographic InfoPaper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 391.
Date of creation: Aug 2005
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Other versions of this item:
- Dubois, P., 2005. "Heterogeneity of preferences, limited commitment and coalitions : empirical evidence on the limits to risk sharing in rural Pakistan," Economics Working Paper Archive (Toulouse) 200505, French Institute for Agronomy Research (INRA), Economics Laboratory in Toulouse (ESR Toulouse).
- Dubois, Pierre, 2006. "Heterogeneity of Preferences, Limited Commitment and Coalitions: Empirical Evidence on the Limits to Risk Sharing in Rural Pakistan," CEPR Discussion Papers 6004, C.E.P.R. Discussion Papers.
- NEP-AGR-2006-06-24 (Agricultural Economics)
- NEP-ALL-2006-06-24 (All new papers)
- NEP-CWA-2006-06-24 (Central & Western Asia)
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- Tessa Bold, 2008. "Implications of Endogenous Group Formation for Efficient Risk-Sharing," Economics Series Working Papers 387, University of Oxford, Department of Economics.
- Fabien MOIZEAU & Fernando JARAMILLO & Hubert KEMPF, 2011. "Heterogeneity and the Formation of Risk-Sharing Coalitions," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201111, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
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