This paper studies the relationship between group size and informal risk sharing. It shows that under limited commitment with coalitional deviations, this relationship is theoretically ambiguous. It investigates this question empirically using data on sibship size of household heads and spouses from rural Malawi, exploiting a social norm among the main sample ethnic group to define the potential risk‐sharing group. We uncover evidence of worse risk sharing of crop losses in larger potential risk‐sharing groups, and rule out alternative explanations for the findings. A simple calibration exercise indicates that our empirical findings are consistent with the theory.
Authors
Research Fellow University College London
Emla Fitzsimons is a Professor of Economics at the University College London Institute of Education and a Research Fellow at the IFS.
Research Fellow University College London
Marcos is a Research Fellow at IFS, an Affiliate at the Rural Education Action Program and a Professor of Economics at the University College London.
Research Fellow University of Kent
Bansi is a Research Fellow of the IFS, a Senior Lecturer of Economics at the University of Kent and also a Fellow at the Global Labor Organisation.
Journal article details
- DOI
- 10.1111/ecoj.12565
- Publisher
- Wiley
- Issue
- Volume 128, Issue 612, June 2018, pages F575-F608
Suggested citation
E, Fitzsimons and B, Malde and M, Vera-Hernandez. (2018). 'Group Size and the Efficiency of Informal Risk Sharing' 128(612/2018), pp.F575–F608.
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