Risk Sharing Relations and Enforcement Mechanisms
We investigate whether the set of available enforcement mechanisms affects the formation of risk sharing relations by applying dyadic regression analysis to data from a specifically designed behavioural experiment, two surveys and a genealogical mapping exercise.� During the experiment participants are invited to form risk sharing relations under three institutional environments, each associated with different enforcement mechanisms: external, intrinsic, and endogenous extrinsic, i.e., the threat of (partial) social exclusion.� Dyads who are similar in age and gender, genetically related, or who belong to the same organizations with an economic purpose are more likely to share risk.� However, the latter are associated with less risk sharing when endogenous extrinsic incentives can be applied, while co-membership in religious congregations and being related by marriage support enforcement through such incentives.� We find no evidence of assortative grouping on risk preferences but, ex post, co-group members' risk-taking behavior converges.
|Date of creation:||01 Apr 2008|
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