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The Origins of Risk Sharing: An Experimental Approach

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Author Info

  • Steven Gazzillo

    ()
    (Rutgers University)

  • Barry Sopher

    ()
    (Rutgers University)

  • Athena Aktipis

    (Arizona State University)

  • Lee Cronk

    (Rutgers University)

Abstract

Controversy exists about the act of giving as altruistic instead of self-interested behavior. Each side of this argument interprets similar results from similar experiments in different ways. One side argues the results show that the appearance of altruistic behavior can be explained by self-interested motives. The other side argues these results are evidence of group selection,where a group member takes an action that is harmful to itself but benefi cial to the group. We consider this question using a novel approach. We create a rich experimental environment in which subjects have the ability to cooperate to improve the group's outcome by sharing their wealth in non-compulsory, non-enforceable risk-sharing arrangements. We find that average subject behavior appears to be motivated by self-interest more than group survival.

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Bibliographic Info

Paper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number 201302.

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Length: 20 pages
Date of creation: 18 Jan 2013
Date of revision:
Handle: RePEc:rut:rutres:201302

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Keywords: risk sharing; experiment; resource management;

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  1. Coate, Stephen & Ravallion, Martin, 1993. "Reciprocity without commitment : Characterization and performance of informal insurance arrangements," Journal of Development Economics, Elsevier, vol. 40(1), pages 1-24, February.
  2. Richard A. Posner, 1979. "A Theory of Primitive Society with Special Reference to Law," University of Chicago - George G. Stigler Center for Study of Economy and State 7, Chicago - Center for Study of Economy and State.
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