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2023
- handle: 10670/1.9t6na1
- hal: hal-04247501
- doi: 10.2139/ssrn.4408595
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Mots-clés
Risk Sharing Informal Insurance Group Formation Social Control Risk Heterogeneity Homophily Dyadic Models Thailand C - Mathematical and Quantitative Methods/C.C7 - Game Theory and Bargaining Theory/C.C7.C71 - Cooperative Games D - Microeconomics/D.D8 - Information, Knowledge, and Uncertainty/D.D8.D81 - Criteria for Decision-Making under Risk and Uncertainty O - Economic Development, Innovation, Technological Change, and Growth/O.O1 - Economic Development/O.O1.O12 - Microeconomic Analyses of Economic Development O - Economic Development, Innovation, Technological Change, and Growth/O.O1 - Economic Development/O.O1.O17 - Formal and Informal Sectors • Shadow Economy • Institutional ArrangementsCiter ce document
Fernando Jaramillo et al., « Limited Commitment, Social Control and Risk-Sharing Coalitions in Village Economies », HAL-SHS : économie et finance, ID : 10.2139/ssrn.4408595
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Résumé
The need to insure against idiosyncratic income risk leads to the formation of risksharing groups in village economies where formal financial markets are absent. We develop a theoretical model to address the impact of limited commitment and social control on the extent of informal risk sharing when agents are induced to form such risk-sharing coalitions. Social control increases the prospect of future punishment of present defectors and thus mitigates the absence of commitment. A defection-proof core-partition exists, is unique and homophilic. Riskier societies may not be more segmented and may not pay a higher cost for insurance. A higher social control leads to a less segmented society but does not necessarily lead to a lower price for sharing risk. We provide evidence, based on data on Thai villages, that consumption smoothing conforms with our theoretical result of homophily-based coalitions and that social control contributes to a lesser segmentation of a society.