Voting over Informal Risk--Sharing Rules
This paper posits a new approach to informal risk-sharing in developing countries inspired by anthropological studies. A risk-sharing rule emerges as a collective choice which is enforced through peer-pressure. I determine the elected rules and the level of compliance with these rules. Full risk-sharing is achieved only if everybody complies. Partial risk-sharing arises more often with full or partial compliance. In many cases, a majority of people vote for and comply with the risk-sharing rule that maximises their own expected payoff. Yet a minority of people might comply with a rule which is detrimental to them. Copyright 2008 The author 2008. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: email@example.com, Oxford University Press.
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Volume (Year): 17 (2008)
Issue (Month): 4 (August)
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- George A. Akerlof, 1978. "A theory of social custom, of which unemployment may be one consequence," Special Studies Papers 118, Board of Governors of the Federal Reserve System (U.S.).
- Abigail Barr, 2001. "Social dilemmas and shame-based sanctions: experimental results from rural Zimbabwe," CSAE Working Paper Series 2001-11, Centre for the Study of African Economies, University of Oxford.
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