Risk-Sharing Social Networks

Teodor Sedlarski and Diana Dimitrova

Yearbook of the Faculty of Economics and Business Administration, Sofia University, 2016, vol. 13, issue 1, 269-291

Abstract: In this article we survey basic research problems in the economic literature on social networks for risk sharing. Summaryzed are the economic, as well as the social and demographic factors for the formation of risk sharing social networks. Because of the transaction costs for sustaining relationships (information, eforcement cost, etc.) real-life equilibrium networks generally have less then the optimal number of members from a risk sharing perspective. Research results suggest that in the field formal and informal mechanisms for risk sharing function not only as substitutes, but also as complementaries. Enhancing economic distribution can improve risk sharing through an increased penetration of formal shemes in rural areas.

Keywords: social networks; risk sharing; consumption smoothing; network formation; enforcement; social norms. (search for similar items in EconPapers)
JEL-codes: D85 R12 (search for similar items in EconPapers)
Date: 2016
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