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Who Shares Risk with Whom under Different Enforcement Mechanisms?

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  • Abigail Barr
  • Marleen Dekker
  • Marcel Fafchamps

Abstract

We investigate whether available enforcement mechanisms affect who shares risk with whom in sub-Saharan Africa, by applying dyadic regression analysis to data from a lab-type experiment, surveys, and a genealogical-mapping exercise. During the experiment, participants were invited to form risk-sharing groups under three enforcement mechanisms: external, intrinsic, and extrinsic (i.e., social sanctioning). Same-sex dyads and dyads who belong to the same economic community-based organizations (CBOs) are more likely to share risk. However, when social sanctioning is possible, comembers in economic CBOs withdraw from group formation and coreligion, and marriage ties come to the fore.

Suggested Citation

  • Abigail Barr & Marleen Dekker & Marcel Fafchamps, 2012. "Who Shares Risk with Whom under Different Enforcement Mechanisms?," Economic Development and Cultural Change, University of Chicago Press, vol. 60(4), pages 677-706.
    • Handle: RePEc:ucp:ecdecc:doi:10.1086/665599
    DOI: 10.1086/665599
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    References listed on IDEAS

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    Cited by:

    1. Sonia Di Giannatale & Alexander Elbittar & Patricia López-Rodríguez & María-José Roa-García, 2013. "Trust, Information Acquisition and Financial Decisions: A Field Experiment," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(2), pages 375-401, July-Dece.
    2. Barr, Abigail & Dekker, Marleen & Fafchamps, Marcel, 2015. "The Formation of Community-Based Organizations: An Analysis of a Quasi-Experiment in Zimbabwe," World Development, Elsevier, vol. 66(C), pages 131-153.
    3. Islam, Asad & Nguyen, Chau, 2018. "Do networks matter after a natural disaster? A study of resource sharing within an informal network after Cyclone Aila," Journal of Environmental Economics and Management, Elsevier, vol. 90(C), pages 249-268.
    4. Salvatore Di Falco & Razack Lokina & Peter Martinsson & Paolo Pin, 2019. "Altruism and the pressure to share: Lab evidence from Tanzania," PLOS ONE, Public Library of Science, vol. 14(5), pages 1-19, May.
    5. Christian Ahlin, 2017. "Matching Patterns When Group Size Exceeds Two," American Economic Journal: Microeconomics, American Economic Association, vol. 9(1), pages 352-384, February.
    6. Ingela Alger & Jörgen W. Weibull, 2019. "Evolutionary Models of Preference Formation," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 329-354, August.
    7. 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.
    8. Lahno, Amrei M. & Serra-Garcia, Marta & D’Exelle, Ben & Verschoor, Arjan, 2015. "Conflicting risk attitudes," Journal of Economic Behavior & Organization, Elsevier, vol. 118(C), pages 136-149.
    9. Ingela Alger & Laura Juarez & Miriam Juarez-Torres & Josepa Miquel-Florensa, 2020. "Do Informal Transfers Induce Lower Efforts? Evidence from Lab-in-the-Field Experiments in Rural Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 69(1), pages 107-171.
    10. Heath Henderson & Arnob Alam, 2022. "The structure of risk-sharing networks," Empirical Economics, Springer, vol. 62(2), pages 853-886, February.
    11. Rachel Cassidy & Marcel Fafchamps, 2015. "Can community-based microfinance groups match savers with borrowers? Evidence from rural Malawi," CSAE Working Paper Series 2015-13, Centre for the Study of African Economies, University of Oxford.
    12. Jain, Prachi, 2020. "Imperfect monitoring and informal insurance: The role of social ties," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 241-256.
    13. Stoeffler, Quentin & Opuz, Gülce, 2022. "Price, information and product quality: Explaining index insurance demand in Burkina Faso," Food Policy, Elsevier, vol. 108(C).
    14. Reindl, Ilona & Tyran, Jean-Robert, 2021. "Equal opportunities for all? How income redistribution promotes support for economic inclusion," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 390-407.
    15. Cassidy, Rachel & Fafchamps, Marcel, 2020. "Banker my neighbour: Matching and financial intermediation in savings groups," Journal of Development Economics, Elsevier, vol. 145(C).
    16. Di Falco, Salvatore & Berck, Peter & Bezabih, Mintewab & Köhlin, Gunnar, 2019. "Rain and impatience: Evidence from rural Ethiopia," Journal of Economic Behavior & Organization, Elsevier, vol. 160(C), pages 40-51.
    17. Nicholas Sabin, 2023. "Choosing partners: selection priorities of joint liability group leaders," Empirical Economics, Springer, vol. 64(1), pages 323-348, January.
    18. Arun G. Chandrasekhar & Cynthia Kinnan & Horacio Larreguy, 2018. "Social Networks as Contract Enforcement: Evidence from a Lab Experiment in the Field," American Economic Journal: Applied Economics, American Economic Association, vol. 10(4), pages 43-78, October.
    19. Comola, Margherita & Prina, Silvia, 2014. "Do Interventions Change the Network? A Panel Peer-Effect Model Accounting for Endogenous Network Changes," IZA Discussion Papers 8641, Institute of Labor Economics (IZA).
    20. Paan Jindapon & Pacharasut Sujarittanonta & Ajalavat Viriyavipart, 2022. "Income Interdependence and Informal Risk Sharing Under the Shadow of the Future," PIER Discussion Papers 191, Puey Ungphakorn Institute for Economic Research.
    21. Fafchamps, Marcel & Beck, Ulrik & Bjerge, Benedikte, 2015. "Social Ties and the Efficiency of Factor Transfers," CEPR Discussion Papers 10957, C.E.P.R. Discussion Papers.
    22. Landmann, Andreas & Seitz, Helke & Steiner, Susan, 2017. "Intergenerational Coresidence and Female Labour Supply," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168282, Verein für Socialpolitik / German Economic Association.
    23. Gulesci,Selim, 2020. "Poverty Alleviation and Interhousehold Transfers : Evidence from BRAC's Graduation Program in Bangladesh," Policy Research Working Paper Series 9467, The World Bank.
    24. Jain, Prachi & Lay, Margaret J., 2021. "Are informal transfers driven by strategic risk-sharing or fairness? Evidence from an experiment in Kenya," Journal of Economic Behavior & Organization, Elsevier, vol. 191(C), pages 186-196.

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