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Structural experimentation to distinguish between models of risk sharing with frictions in rural Paraguay

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  • Ligon, Ethan
  • Schechter, Laura

Abstract

We conduct dictator-type games in rural Paraguay; different treatments involve manipulating players’ information and choice sets. From individuals’ choices in the games, we draw inferences regarding impediments to efficient risk sharing in the larger village supergame. Outcomes from the experimental games suggest that players in most villages are reacting to the kinds of incentives that we would predict from a private information model with hidden investments, while in others players act in a manner consistent with the predictions of a model with limited commitment. No single one of our models can explain outcomes in all villages, but outcomes in nearly every village are consistent with one or more of our models.
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  • Ligon, Ethan & Schechter, Laura, 2017. "Structural experimentation to distinguish between models of risk sharing with frictions in rural Paraguay," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt9891t8g3, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt9891t8g3
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    Cited by:

    1. Li, Zhimin & Ligon, Ethan, 2020. "Inferring informal risk-sharing regimes: Evidence from rural Tanzania," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 941-955.
    2. Costas Meghir & Ahmed Mushfiq Mobarak & Ahmed Corina Mommaerts & Ahmed Melanie Morten, 2019. "Migration and Informal Insurance," Cowles Foundation Discussion Papers 2185, Cowles Foundation for Research in Economics, Yale University.

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