Essays on group decision-making with strategic interactions : an application to informal insurance
(2010)
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- Authors
- Supervisors
- Gaspart, Frédéric
- Abstract
- (en) In developing countries, a large proportion of the population derives its income from agricultural activities which are exposed to substantial risks due to large fluctuations in agricultural productions (due notably to weather shocks and diseases) and prices. In order to smooth their income and consumption, households would like to appeal to credit and insurance markets. Unfortunately, markets and state institutions are often missing or malfunctioning in these areas which leads individuals to form groups where members are both consumers and providers of insurance and/or credit services. In this dissertation, we address the following questions. Under which conditions do these informal institutions emerge, and how? We study the decision-making process of these institutions in the presence of conflicts of interest between their members. In chapter 1, we focus on the impact of the set of alternatives from which the group can choose. More precisely, we study the stability of a decision rule's outcome under variations in the set of alternatives. We show that there exist decision rules which satisfy such a stability requirement and other desirable properties. In the last two chapters, the economic environment is characterized by agents facing volatile incomes with various degrees of risk aversion and who gather to form risk-sharing groups. Chapter 2 provides a theory of endogenous formation of such groups, accounting for the fact that some members may choose in some instances to renege on their obligations towards the group. This lack of contract enforceability highlights the existence of a trade-off between the group's size and the extent of risk-sharing. Chapter 3 studies the interaction between membership and heterogenous agents' risk-taking behavior. When insured, rich farmers tend to choose risky production plans, which increases the group's aggregate risk and deters poorer farmers from taking part to mutual insurance.
- Affiliations
Citations
Weynants, S. (2010). Essays on group decision-making with strategic interactions : an application to informal insurance. https://hdl.handle.net/2078.5/131024