The Dynamics of Cooperation in Group Lending - A Microfinance Experiment
We investigate the dynamics of borrower behavior in a microfinance experiment in which subjects are jointly responsible for credit repayment. Although cooperation levels are generally high, moral hazard problems persist among borrowers. Moreover, the path dependency of decisions mitigates the insurance effect of joint liability. We compare two conversion mechanisms from joint to individual liability. First, an active choice of the joint liability contract does not systematically increase cooperation. Second, conversion based on repayment success tends to have a detrimental impact on cooperation among the remaining joint liability borrowers.
|Date of creation:||11 Mar 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 0221 / 470 5607
Fax: 0221 / 470 5179
Web page: http://www.wiso.uni-koeln.deEmail:
More information through EDIRC
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.:
- Xavier Gine & Pamela Jakiela & Dean Karlan & Jonathan Morduch, 2006.
2102, The Field Experiments Website.
- Gine, Xavier & Jakiela, Pamela & Karlan, Dean & Morduch, Jonathan, 2006. "Microfinance games," Policy Research Working Paper Series 3959, The World Bank.
- Dean Karlan & Jonathan Morduch & Pamela Jakiela & Xavier Gine, 2006. "Microfinance games," Framed Field Experiments 00150, The Field Experiments Website.
- Dean Karlan & Xavier Gine & Jonathan Morduch & Pamela Jakiela, 2006. "Microfinance Games," Working Papers 936, Economic Growth Center, Yale University.
- Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
- Guinnane, T. & Banerjee, A. & Besley, T., 1993.
"Thy Neighbor's Keeper: the Design of a Credit Cooperative with Theory and a Test,"
705, Yale - Economic Growth Center.
- Banerjee, Abhijit V & Besley, Timothy & Guinnane, Timothy W, 1994. "Thy Neighbor's Keeper: The Design of a Credit Cooperative with Theory and a Test," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 491-515, May.
- Armendariz de Aghion, Beatriz, 1999. "On the design of a credit agreement with peer monitoring," Journal of Development Economics, Elsevier, vol. 60(1), pages 79-104, October.
- Besley, Timothy & Coate, Stephen, 1995.
"Group lending, repayment incentives and social collateral,"
Journal of Development Economics,
Elsevier, vol. 46(1), pages 1-18, February.
- Besley, T. & Coate, S., 1991. "Group Lending, Repayment Incentives And Social Collateral," Papers 152, Princeton, Woodrow Wilson School - Development Studies.
- Fischbacher, Urs & Gachter, Simon & Fehr, Ernst, 2001.
"Are people conditionally cooperative? Evidence from a public goods experiment,"
Elsevier, vol. 71(3), pages 397-404, June.
- Urs Fischbacher & Simon Gaechter & Ernst Fehr, . "Are People Conditionally Cooperative? Evidence from a Public Goods Experiment," IEW - Working Papers 016, Institute for Empirical Research in Economics - University of Zurich.
- Van Tassel, Eric, 1999. "Group lending under asymmetric information," Journal of Development Economics, Elsevier, vol. 60(1), pages 3-25, October.
- Grimm, Veronika & Mengel, Friederike, 2009.
"Cooperation in viscous populations--Experimental evidence,"
Games and Economic Behavior,
Elsevier, vol. 66(1), pages 202-220, May.
- Friederike Mengel & Veronika Grimm, 2007. "Cooperation In Viscous Populations - Experimental Evidence," Working Papers. Serie AD 2007-17, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Gunnthorsdottir, Anna & Houser, Daniel & McCabe, Kevin, 2007.
"Disposition, history and contributions in public goods experiments,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 62(2), pages 304-315, February.
- Anna Gunnthorsdottir & Daniel Houser & Kevin McCabe & Holly Ameden, 2004. "Disposition, History and Contributions in Public Goods Experiments," Experimental 0401001, EconWPA.
- de Aghion, Beatriz Armendariz & Gollier, Christian, 2000. "Peer Group Formation in an Adverse Selection Model," Economic Journal, Royal Economic Society, vol. 110(465), pages 632-43, July.
- Bohnet, Iris & Kübler, Dorothea, 2000.
"Compensating the cooperators: Is sorting in the prisoner's dilemma possible?,"
SFB 373 Discussion Papers
2001,2, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Bohnet, Iris & Kubler, Dorothea, 2005. "Compensating the cooperators: is sorting in the prisoner's dilemma possible?," Journal of Economic Behavior & Organization, Elsevier, vol. 56(1), pages 61-76, January.
- Ghatak, Maitreesh, 1999. "Group lending, local information and peer selection," Journal of Development Economics, Elsevier, vol. 60(1), pages 27-50, October.
When requesting a correction, please mention this item's handle: RePEc:kls:series:0049. 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: (Peter Werner)
If references are entirely missing, you can add them using this form.