Stability in informal insurances: an approach by networks and overlapping coalitions

Messan Agbaglah

Cahiers de recherche from Departement d'économique de l'École de gestion à l'Université de Sherbrooke

Abstract: Based on empirical facts, we build a model of informal insurance institutions and study their stability. In our setting, risk sharing groups are overlapping homogenous coalitions, originating from networks of historical trust relationships. We derive a general folk theorem that works in an environment of uncertainty and we identify the determinants of stability which are robust to social norms. Our results provide theoretical explanations for empirical findings, including the puzzle that rich families in rural economies in developing countries consume less. Our approach bridges the two traditional approaches of clubs and bilateral agreements.

Keywords: Informal insurance; networks; overlapping coalitions; stability (search for similar items in EconPapers)
JEL-codes: D71 D85 O17 Z13 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2014-10
New Economics Papers: this item is included in nep-ias, nep-iue, nep-net and nep-soc
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:shr:wpaper:14-10

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