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Mutual Insurance Networks in Communities

Author

Listed:
  • Pascal Billand

    () (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

  • Christophe Bravard

    () (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

  • Sudipta Sarangi

    (Department of Economics, Louisiana State University - Department of Economics, Louisiana State University)

Abstract

We study the formation of mutual insurance networks in a model where every agent who obtains more resources gives a fixed amount of resources to all agents who have obtained less resources. The low resource agent must be directly linked to the high resource agent to receive this transfer. We identify the pairwise stable networks and efficient networks. Then, we extend our model to situations where agents differ in their generosity with regard to the transfer scheme. We show that there exist conditions under which in a pairwise stable network agents who provide the same level of transfers are linked together, while there are no links between agents who provide high transfers and agents who provide low transfers.

Suggested Citation

  • Pascal Billand & Christophe Bravard & Sudipta Sarangi, 2012. "Mutual Insurance Networks in Communities," Working Papers halshs-00768430, HAL.
  • Handle: RePEc:hal:wpaper:halshs-00768430 Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00768430
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    References listed on IDEAS

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    More about this item

    Keywords

    Mutual insurance networks; Pairwise stable networks; Effi cient networks;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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