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Unpublished Paper
Risk Sharing, Commitment and Information: An experimental analysis
The Centre for the Study of African Economies Working Paper Series (2008)
  • Abigail Barr
  • Garance Genicot, Georgetown University
Abstract

This paper describes and analyzes the results of a unique field experiment especially designed to test the effects of the level of commitment and information available to individuals when sharing risk. We find that limiting exogenously provided commitment is associated with less risk sharing, while limiting information on defections can be associated with more risk sharing. These results can be understood by distinguishing between intrinsic and extrinsic incentives, and by recognizing that social sanctions are costly to inflict or that individuals suffer from time-inconsistent preferences. Comparing the groups formed within our experiment with the real life risk sharing networks in a few villages allows us to test the external validity of our experiment and suggests that the results are salient to our understanding of risk sharing arrangements observed in developing countries.

Keywords
  • Field experiment; risk sharing; social sanctions; insurance; limited
Publication Date
February 21, 2008
Citation Information
Abigail Barr and Garance Genicot. "Risk Sharing, Commitment and Information: An experimental analysis" The Centre for the Study of African Economies Working Paper Series (2008)
Available at: http://works.bepress.com/garance_genicot/2/