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Risk Pooling, Risk Preferences, and Social Networks

Author

Listed:
  • 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)

Suggested Citation

  • Orazio Attanasio & Abigail Barr & Juan Camilo Cardenas & Garance Genicot & Costas Meghir, 2012. "Risk Pooling, Risk Preferences, and Social Networks," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 134-167, April.
  • 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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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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