Microfinance Games

Xavier Gine, Pamela Jakiela, Dean Karlan and Jonathan Morduch

No 28520, Center Discussion Papers from Yale University, Economic Growth Center

Abstract: Microfinance has been heralded as an effective way to address imperfections in credit markets. From a theoretical perspective, however, the success of microfinance contracts has puzzling elements. In particular, the group-based mechanisms often employed are vulnerable to free-riding and collusion, although they can also reduce moral hazard and improve selection. We created an experimental economics laboratory in a large urban market in Lima, Peru and over seven months conducted eleven different games that allow us to unpack microfinance mechanisms in a systematic way. We find that risk-taking broadly conforms to predicted patterns, but that behavior is safer than optimal. The results help to explain why pioneering microfinance institutions have been moving away from group-based contracts.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 46
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Microfinance Games (2010)
Working Paper: Microfinance Games (2006)
Working Paper: Microfinance games (2006)
Working Paper: Microfinance Games (2006)
Working Paper: Microfinance games (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:yaleeg:28520

DOI: 10.22004/ag.econ.28520

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