Risk Pooling, Risk Preferences, and Social Networks
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)
Volume (Year): 4 (2012)
Issue (Month): 2 (April)
|Contact details of provider:|| Web page: https://www.aeaweb.org/aej-applied|
More information through EDIRC
|Order Information:||Web: https://www.aeaweb.org/subscribe.html|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Francis Bloch (GREQAM and Universite de la Mediterranee), Garance Genicot (Georgetown University, and Debraj Ray (New York University and Instituto de Analisis Economico (CSIC)), 2004.
"Informal Insurance in Social Networks,"
gueconwpa~04-04-16, Georgetown University, Department of Economics.
- Hans Binswanger, 1980.
"Attitudes toward risk: Experimental measurement in rural india,"
Artefactual Field Experiments
00009, The Field Experiments Website.
- Hans P. Binswanger, 1980. "Attitudes Toward Risk: Experimental Measurement in Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 395-407.
- Stefan Dercon & Joachim de Weerdt, 2004.
"Risk-Sharing Networks And Insurance Against Illness,"
Development and Comp Systems
- De Weerdt, Joachim & Dercon, Stefan, 2006. "Risk-sharing networks and insurance against illness," Journal of Development Economics, Elsevier, vol. 81(2), pages 337-356, December.
- Stefan Dercon & Joachim De Weerdt, 2002. "Risk-sharing networks and insurance against illness," CSAE Working Paper Series 2002-16, Centre for the Study of African Economies, University of Oxford.
- Ghatak, Maitreesh, 2000. "Screening by the Company You Keep: Joint Liability Lending and the Peer Selection Effect," Economic Journal, Royal Economic Society, vol. 110(465), pages 601-631, July.
- Attila Ambrus & Markus Mobius & Adam Szeidl, 2007.
"Consumption Risk-sharing in Social Networks,"
Economics Working Papers
0079, Institute for Advanced Study, School of Social Science.
- Patrick Legros & Andrew F. Newman, 2007.
"Beauty Is a Beast, Frog Is a Prince: Assortative Matching with Nontransferabilities,"
Econometric Society, vol. 75(4), pages 1073-1102, 07.
- Patrick Legros & Andrew F. Newman, 2002. "Beauty is a Beast, Frog is a Prince: Assortative Matching with Nontransferabilities," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-149, Boston University - Department of Economics, revised Nov 2004.
- Patrick Legros & Andrew F. Newman, 2003. "Beauty is a Beast, Frog is a Prince: Assortative Matching with Nontransferabilities," Economics Working Papers 0030, Institute for Advanced Study, School of Social Science.
- Chung, Kim-Sau, 2000. "On the Existence of Stable Roommate Matchings," Games and Economic Behavior, Elsevier, vol. 33(2), pages 206-230, November.
- Arcand, Jean-Louis & Fafchamps, Marcel, 2012. "Matching in community-based organizations," Journal of Development Economics, Elsevier, vol. 98(2), pages 203-219.
- Gabrielle Demange, 2005.
"Group formation: The interaction of increasing returns and preferences' diversity,"
- Gabrielle Demange, 2005. "Group formation: The interaction of increasing returns and preferences' diversity," Post-Print halshs-00576792, HAL.
- Gabrielle Demange, 2004. "Group formation: The interaction of increasing returns and preferences' diversity," DELTA Working Papers 2004-30, DELTA (Ecole normale supérieure).
- Yann Bramoullé & Rachel Kranon, 2005.
Cahiers de recherche
- repec:dau:papers:123456789/4392 is not listed on IDEAS
- Marcel Fafchamps & Susan Lund, 2000.
"Risk-Sharing Networks in Rural Philippines,"
Economics Series Working Papers
10, University of Oxford, Department of Economics.
- Besley, T. & Coate, S., 1991.
"Group Lending, Repayment Incentives And Social Collateral,"
152, Princeton, Woodrow Wilson School - Development Studies.
- Besley, Timothy & Coate, Stephen, 1995. "Group lending, repayment incentives and social collateral," Journal of Development Economics, Elsevier, vol. 46(1), pages 1-18, February.
- Chade, Hector, 2006. "Matching with noise and the acceptance curse," Journal of Economic Theory, Elsevier, vol. 129(1), pages 81-113, July.
- Loic Sadoulet, 2000. "Equilibrium Risk-Matching in Group Lending," Econometric Society World Congress 2000 Contributed Papers 1302, Econometric Society.
- de Janvry, Alain & Sadoulet, Elisabeth & Winters, Paul C. & Murgai, Rinku, 2000.
"Localized and Incomplete Mutual Insurance,"
12905, University of New England, School of Economics.
- S. Narayan, 2009. "India," Chapters, in: The Political Economy of Trade Reform in Emerging Markets, chapter 7 Edward Elgar Publishing.
- Chowdhury, Prabal Roy, 2007.
"Group-lending with sequential financing, contingent renewal and social capital,"
Journal of Development Economics,
Elsevier, vol. 84(1), pages 487-506, September.
- Prabal Roy Chowdhury, 2006. "Group-lending with sequential financing, contingent renewal and social capital," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 06-01, Indian Statistical Institute, New Delhi, India.
- Sergio Currarini & Matthew O. Jackson & Paolo Pin, 2009.
"An Economic Model of Friendship: Homophily, Minorities, and Segregation,"
Econometric Society, vol. 77(4), pages 1003-1045, 07.
- Sergio Currarini & Paolo Pin & Matthew O. Jackson, 2007. "An Economic Model of Friendship: Homophily, Minorities and Segregation," Working Papers 2007_20, Department of Economics, University of Venice "Ca' Foscari".
- Fafchamps, Marcel & Gubert, Flore, 2007.
"The formation of risk sharing networks,"
Journal of Development Economics,
Elsevier, vol. 83(2), pages 326-350, July.
- Seth Carpenter & Loic Sadoulet, 2000. "Risk-Matching in Credit Groups: Evidence from Guatemala," Econometric Society World Congress 2000 Contributed Papers 1310, Econometric Society.
- Abigail Barr & Marleen Dekker & Marcel Fafchamps, 2012. "Who Shares Risk with Whom under Different Enforcement Mechanisms?," Economic Development and Cultural Change, University of Chicago Press, vol. 60(4), pages 677-706.
- Dercon, Stefan & De Weerdt, Joachim & Bold, Tessa & Pankhurst, Alula, 2006.
"Group-based funeral insurance in Ethiopia and Tanzania,"
Elsevier, vol. 34(4), pages 685-703, April.
- Stefan Dercon & Tessa Bold & Joachim De Weerdt & Alula Pankhurst, 2004. "Group-based Funeral Insurance in Ethiopia and Tanzania," CSAE Working Paper Series 2004-27, Centre for the Study of African Economies, University of Oxford.
- Ghatak, Maitreesh, 1999. "Group lending, local information and peer selection," Journal of Development Economics, Elsevier, vol. 60(1), pages 27-50, October.
- Garance Genicot & Debraj Ray, 2003. "Group Formation in Risk-Sharing Arrangements," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 87-113.
This item is featured on the following reading lists or Wikipedia pages:
- Risk Pooling, Risk Preferences, and Social Networks (AEJ:AE 2012) in ReplicationWiki
When requesting a correction, please mention this item's handle: RePEc:aea:aejapp:v:4:y:2012:i:2:p:134-67. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros)or (Michael P. Albert)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.