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The Origins of Risk Sharing: An Experimental Approach

Author

Listed:
  • Steven Gazzillo

    () (Rutgers University)

  • Barry Sopher

    () (Rutgers University)

  • Athena Aktipis

    (Arizona State University)

  • Lee Cronk

    (Rutgers University)

Abstract

Controversy exists about the act of giving as altruistic instead of self-interested behavior. Each side of this argument interprets similar results from similar experiments in different ways. One side argues the results show that the appearance of altruistic behavior can be explained by self-interested motives. The other side argues these results are evidence of group selection,where a group member takes an action that is harmful to itself but benefi cial to the group. We consider this question using a novel approach. We create a rich experimental environment in which subjects have the ability to cooperate to improve the group's outcome by sharing their wealth in non-compulsory, non-enforceable risk-sharing arrangements. We find that average subject behavior appears to be motivated by self-interest more than group survival.

Suggested Citation

  • Steven Gazzillo & Barry Sopher & Athena Aktipis & Lee Cronk, 2013. "The Origins of Risk Sharing: An Experimental Approach," Departmental Working Papers 201302, Rutgers University, Department of Economics.
  • Handle: RePEc:rut:rutres:201302
    as

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    File URL: http://www.sas.rutgers.edu/virtual/snde/wp/2013-02.pdf
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    References listed on IDEAS

    as
    1. Orazio Attanasio & Abigail Barr & Juan Camilo Cardenas & Garance Genicot & Costas Meghir, 2012. "Risk Pooling, Risk Preferences, and Social Networks," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 134-167, April.
    2. Coate, Stephen & Ravallion, Martin, 1993. "Reciprocity without commitment : Characterization and performance of informal insurance arrangements," Journal of Development Economics, Elsevier, vol. 40(1), pages 1-24, February.
    3. Posner, Richard A, 1980. "A Theory of Primitive Society, with Special Reference to Law," Journal of Law and Economics, University of Chicago Press, vol. 23(1), pages 1-53, April.
    4. Abigail Barr & Garance Genicot, 2008. "Risk Sharing, Commitment, and Information: An Experimental Analysis," Journal of the European Economic Association, MIT Press, vol. 6(6), pages 1151-1185, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    risk sharing; experiment; resource management;

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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