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Risk Pooling, Risk preferences, and Social Networks

  • Orazio Attansio
  • Abigail Barr
  • Juan Camilo Cardenas
  • Garance Genicot
  • Costas Mehgir

Using date from a field experiment conducted in seventy Colombian municipalities, we investigate who pools risk with whom when risk pooling arrangements are not formally enforced. We explore the roles played by risk attitudes and network connections both theoretically and empirically. We find that pairs of participants who share a bond of friendship or kinship are more likely to (1) join the same risk pooling group and to (2) group assortatively with respect to risk attitudes. Also, consistent with our theoretical finding that when there is a problem of trust the process of pooling assortativley with respect to risk preferences is perturbed, we find (3) only weak evidence of such assorting among unfamiliar individuals.

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Paper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2009-20.

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Date of creation: 2009
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Handle: RePEc:csa:wpaper:2009-20
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