Sharing as risk pooling in a social dilemma experiment

Bibliographic Data

ID4908197
AuthorsTodd L Cherry (0000-0002-9561-8350, Appalachian State University), E Lance Howe (0000-0003-2562-4381, University of Alaska Anchorage), John J Murphy (0000-0001-5619-5693, University of Alaska Anchorage), James J Murphy (0000-0002-3571-2193)
Year2015
Volume20
Issue1
Pagesart68
Publication date2015-01-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueConservation Ecology (JOURNAL)
Journal identifiersISSN: 1195-5449 • E-ISSN: 1708-3087
PublisherResilience Alliance (PUBLISHER • CA)
DOI10.5751/es-07390-200168
OpenAlexW1495315626
LanguageEN
Citations received3
References cited15

In rural economies with missing or incomplete markets, idiosyncratic risk is frequently pooled through informal networks. Idiosyncratic shocks, however, are not limited to private goods but can also restrict an individual from partaking in or benefiting from a collective activity. In these situations, a group must decide whether to provide insurance to the affected member. We describe results of a laboratory experiment designed to test whether a simple sharing institution can sustain risk pooling in a social dilemma with idiosyncratic risk. We tested whether risk could be pooled without a commitment device and, separately, whether effective risk pooling induced greater cooperation in the social dilemma. We found that even in the absence of a commitment device or reputational considerations, subjects voluntarily pooled risk, thereby reducing variance in individual earnings. In spite of effective risk pooling, however, cooperation in the social dilemma was unaffected

Actuarial science · Business · Dilemma · Earnings · Economics · Financial economics · Key person insurance · Microeconomics · Pooling · Public economics · Risk pool · Social dilemma · Systematic risk · Agricultural risk and resilience · Computer Science · Culture, Economy, and Development Studies · Experimental Behavioral Economics Studies · Finance

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Open DOISci-HubOpen Access