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Risk Pooling, Risk Preferences, and Social Networks

  • Abigail Barr
  • Orazio Attanasio

Using data 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 assortatively with respect to risk preferences is perturbed, we find (3) only weak evidence of such assorting among unfamiliar individuals.

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File URL: http://www.csae.ox.ac.uk/workingpapers/pdfs/2009-20text.pdf
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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number CSAE WPS/2009-20.

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Date of creation: 01 Nov 2009
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Handle: RePEc:oxf:wpaper:csae-wps/2009-20
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