IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/116537.html
   My bibliography  Save this paper

Collective risk taking by couples: individual vs household risk

Author

Listed:
  • Zheng, Jiakun
  • Couprie, Helene
  • Hopfensitz, Astrid

Abstract

101 real couples participated in a controlled experimental risk taking task involving variations in household and individuals’ income risks, but controlling for ex-ante income inequal- ity. Our design disentangles the effect of household risk, of intra-household risk inequality and of ex-post pay-off inequality. We find that most couples (about 79%) did pool their risk at the household level when risks were borne symmetrically but a significant proportion of couples (about 36%) failed to do so when individual risks were borne asymmetrically. Furthermore, we find that intra-household risk inequality has a larger impact on non-married couples than married ones.

Suggested Citation

  • Zheng, Jiakun & Couprie, Helene & Hopfensitz, Astrid, 2022. "Collective risk taking by couples: individual vs household risk," MPRA Paper 116537, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:116537
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/116537/1/MPRA_paper_116537.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. André Palma & Nathalie Picard & Anthony Ziegelmeyer, 2011. "Individual and couple decision behavior under risk: evidence on the dynamics of power balance," Theory and Decision, Springer, vol. 70(1), pages 45-64, January.
    2. He, Haoran & Martinsson, Peter & Sutter, Matthias, 2012. "Group decision making under risk: An experiment with student couples," Economics Letters, Elsevier, vol. 117(3), pages 691-693.
    3. Elena Cettolin & Arno Riedl & Giang Tran, 2017. "Giving in the face of risk," Journal of Risk and Uncertainty, Springer, vol. 55(2), pages 95-118, December.
    4. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2011. "Individual Risk Attitudes: Measurement, Determinants, And Behavioral Consequences," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 522-550, June.
    5. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-591, May.
    6. Jonathan Robinson, 2012. "Limited Insurance within the Household: Evidence from a Field Experiment in Kenya," American Economic Journal: Applied Economics, American Economic Association, vol. 4(4), pages 140-164, October.
    7. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    8. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    9. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    10. Fudenberg, Drew & Levine, David K., 2012. "Fairness, risk preferences and independence: Impossibility theorems," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 606-612.
    11. J. Michelle Brock & Andreas Lange & Erkut Y. Ozbay, 2013. "Dictating the Risk: Experimental Evidence on Giving in Risky Environments," American Economic Review, American Economic Association, vol. 103(1), pages 415-437, February.
    12. Hélène Couprie & Elisabeth Cudeville & Catherine Sofer, 2020. "Efficiency versus gender roles and stereotypes: an experiment in domestic production," Experimental Economics, Springer;Economic Science Association, vol. 23(1), pages 181-211, March.
    13. Kota Saito, 2013. "Social Preferences under Risk: Equality of Opportunity versus Equality of Outcome," American Economic Review, American Economic Association, vol. 103(7), pages 3084-3101, December.
    14. Mohammed Abdellaoui & Olivier l’Haridon & Corina Paraschiv, 2013. "Individual vs. couple behavior: an experimental investigation of risk preferences," Theory and Decision, Springer, vol. 75(2), pages 175-191, August.
    15. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2012. "The Intergenerational Transmission of Risk and Trust Attitudes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(2), pages 645-677.
    16. François Cochard & Hélène Couprie & Astrid Hopfensitz, 2016. "Do spouses cooperate? An experimental investigation," Review of Economics of the Household, Springer, vol. 14(1), pages 1-26, March.
    17. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 817-869.
    18. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
    19. Joop Hartog & Ada Ferrer‐i‐Carbonell & Nicole Jonker, 2002. "Linking Measured Risk Aversion to Individual Characteristics," Kyklos, Wiley Blackwell, vol. 55(1), pages 3-26.
    20. Chiappori, P.A. & Ekeland, I., 2006. "The micro economics of group behavior: General characterization," Journal of Economic Theory, Elsevier, vol. 130(1), pages 1-26, September.
    21. Frederic Vermeulen, 2002. "Collective Household Models: Principles and Main Results," Journal of Economic Surveys, Wiley Blackwell, vol. 16(4), pages 533-564, September.
    22. Esther Duflo & Christopher Udry, 2003. "Intrahousehold Resource Allocation in Côte D'ivoire: Social Norms, Separate Accounts and Consumption Choices," Working Papers 857, Economic Growth Center, Yale University.
    23. Michal Wiktor Krawczyk & Fabrice Le Lec, 2016. "Dictating the risk: Comment," Post-Print hal-00979631, HAL.
    24. Cochrane, John H, 1991. "A Simple Test of Consumption Insurance," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 957-976, October.
    25. Pierre‐André Chiappori & Krislert Samphantharak & Sam Schulhofer‐Wohl & Robert M. Townsend, 2014. "Heterogeneity and risk sharing in village economies," Quantitative Economics, Econometric Society, vol. 5, pages 1-27, March.
    26. Udry, Christopher, 1996. "Gender, Agricultural Production, and the Theory of the Household," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1010-1046, October.
    27. Anyck Dauphin & Bernard Fortin & Guy Lacroix, 2018. "Is consumption efficiency within households falsifiable?," Review of Economics of the Household, Springer, vol. 16(3), pages 737-766, September.
    28. Ingela Alger & Jörgen W. Weibull, 2010. "Kinship, Incentives, and Evolution," American Economic Review, American Economic Association, vol. 100(4), pages 1725-1758, September.
    29. François Cochard & Hélène Couprie & Astrid Hopfensitz, 2016. "Do spouses cooperate? An experimental investigation," Review of Economics of the Household, Springer, vol. 14(1), pages 1-26, March.
    30. Michal Krawczyk & Fabrice Le Lec, 2016. "Dictating the Risk: Experimental Evidence on Giving in Risky Environments: Comment," American Economic Review, American Economic Association, vol. 106(3), pages 836-839, March.
    31. Maurizio Mazzocco & Shiv Saini, 2012. "Testing Efficient Risk Sharing with Heterogeneous Risk Preferences," American Economic Review, American Economic Association, vol. 102(1), pages 428-468, February.
    32. Ian Bateman & Alistair Munro, 2005. "An Experiment on Risky Choice Amongst Households," Economic Journal, Royal Economic Society, vol. 115(502), pages 176-189, March.
    33. Alistair Munro, 2018. "Intra†Household Experiments: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 32(1), pages 134-175, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alistair Munro, 2018. "Intra†Household Experiments: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 32(1), pages 134-175, February.
    2. Astrid Gamba & Elena Manzoni & Luca Stanca, 2017. "Social comparison and risk taking behavior," Theory and Decision, Springer, vol. 82(2), pages 221-248, February.
    3. François Cochard & Hélène Couprie & Astrid Hopfensitz, 2016. "Do spouses cooperate? An experimental investigation," Review of Economics of the Household, Springer, vol. 14(1), pages 1-26, March.
    4. Müller, Stephan & Rau, Holger A., 2019. "Decisions under uncertainty in social contexts," Games and Economic Behavior, Elsevier, vol. 116(C), pages 73-95.
    5. Matthew Gnagey & Therese Grijalva & Rong Rong, 2020. "Spousal influence and assortative mating on time preferences: a field experiment in the USA," Review of Economics of the Household, Springer, vol. 18(2), pages 461-512, June.
    6. Engel, Christoph & Goerg, Sebastian J., 2018. "If the worst comes to the worst: Dictator giving when recipient’s endowments are risky," European Economic Review, Elsevier, vol. 105(C), pages 51-70.
    7. Gago, Andrés, 2021. "Reciprocity and uncertainty: When do people forgive?," Journal of Economic Psychology, Elsevier, vol. 84(C).
    8. Alexia Gaudeul, 2013. "Social preferences under uncertainty," Jena Economics Research Papers 2013-024, Friedrich-Schiller-University Jena.
    9. Elena Cettolin & Arno Riedl & Giang Tran, 2017. "Giving in the face of risk," Journal of Risk and Uncertainty, Springer, vol. 55(2), pages 95-118, December.
    10. Koch, Melanie & Menkhoff, Lukas & Schmidt, Ulrich, 2021. "Coupled lotteries—A new method to analyze inequality aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 236-256.
    11. Donni, Olivier & Molina, José Alberto, 2018. "Household Collective Models: Three Decades of Theoretical Contributions and Empirical Evidence," IZA Discussion Papers 11915, Institute of Labor Economics (IZA).
    12. Arjan Verschoor & Bereket Kebede & Alistair Munro & Marcela Tarazona, 2019. "Spousal Control and Efficiency of Intra-household Decision-Making: Experiments among Married Couples in India, Ethiopia and Nigeria," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 31(4), pages 1171-1196, September.
    13. Boto-García, David & Mariel, Petr & Baños-Pino, José Francisco, 2023. "Intra-household bargaining for a joint vacation," Journal of choice modelling, Elsevier, vol. 47(C).
    14. Garcia, Thomas & Massoni, Sébastien & Villeval, Marie Claire, 2020. "Ambiguity and excuse-driven behavior in charitable giving," European Economic Review, Elsevier, vol. 124(C).
    15. Bin Miao & Songfa Zhong, 2018. "Probabilistic social preference: how Machina’s Mom randomizes her choice," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(1), pages 1-24, January.
    16. Müller, Stephan & Rau, Holger A., 2017. "Decisions under uncertainty in social contexts," University of Göttingen Working Papers in Economics 290, University of Goettingen, Department of Economics, revised 2017.
    17. Sascha Füllbrunn & Wolfgang J. Luhan, 2015. "Am I my Peer‘s Keeper? Social Responsibility in Financial Decision Making," Ruhr Economic Papers 0551, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    18. Abhinash Borah, 2021. "Individual sense of justice and Harsanyi’s impartial observer," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(1), pages 167-199, July.
    19. Fredrik Carlsson & Peter Martinsson & Ping Qin & Matthias Sutter, 2013. "The influence of spouses on household decision making under risk: an experiment in rural China," Experimental Economics, Springer;Economic Science Association, vol. 16(3), pages 383-401, September.
    20. Mickael Beaud & Mathieu Lefebvre & Julie Rosaz, 2023. "Other-regarding preferences and giving decision in a risky environment: experimental evidence," Review of Economic Design, Springer;Society for Economic Design, vol. 27(2), pages 359-385, June.

    More about this item

    Keywords

    Experiment; Income pooling; Household risk taking; Inequality;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D19 - Microeconomics - - Household Behavior - - - Other
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:116537. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.