Design principles for risk-pooling systems

Lee Cronk () and Athena Aktipis
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Lee Cronk: Rutgers University
Athena Aktipis: Arizona State University

Nature Human Behaviour, 2021, vol. 5, issue 7, 825-833

Abstract: Abstract In times of crisis, risk pooling can enhance the resilience of individuals, households and communities. Risk-pooling systems are most effective when their participants adhere to several principles: (1) participants should agree that the pool is for needs that arise unpredictably, not for routine, predictable needs; (2) giving to those in need should not create an obligation for them to repay; (3) participants should not be expected to help others until they have taken care of their own needs; (4) participants should have a consensus about what constitutes need; (5) resources should be either naturally visible or made visible to reduce cheating; (6) individuals should be able to decide which partners to accept; and (7) the scale of the network should be large enough to cover the scale of risks. We discuss the cultural and evolutionary foundations of risk-pooling systems, their vulnerabilities and their relationship to commercial insurance.

Date: 2021
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DOI: 10.1038/s41562-021-01121-9

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