Consumption Risk-Sharing in Social Networks
Publication
, Journal Article
Ambrus, A; Mobius, M; Szeidl, A
Published in: American Economic Review
January 2014
We develop a model in which connections between individuals serve as social collateral to enforce informal insurance payments. We show that: (i) The degree of insurance is governed by the expansiveness of the network, measured with the per capita number of connections that groups have with the rest of the community. "Two-dimensional" networks?like real-world networks in Peruvian villages?are sufficiently expansive to allow very good risk-sharing. (ii) In second- best arrangements, insurance is local: agents fully share shocks within, but imperfectly between endogenously emerging risk-sharing groups. We also discuss how endogenous social collateral affects our results.
Duke Scholars
Published In
American Economic Review
Publication Date
January 2014
Volume
104
Issue
1
Related Subject Headings
- Economics
- 15 Commerce, Management, Tourism and Services
- 14 Economics
Citation
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ICMJE
MLA
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Ambrus, A., Mobius, M., & Szeidl, A. (2014). Consumption Risk-Sharing in Social Networks. American Economic Review, 104(1).
Ambrus, Attila, Markus Mobius, and Adam Szeidl. “Consumption Risk-Sharing in Social Networks.” American Economic Review 104, no. 1 (January 2014).
Ambrus A, Mobius M, Szeidl A. Consumption Risk-Sharing in Social Networks. American Economic Review. 2014 Jan;104(1).
Ambrus, Attila, et al. “Consumption Risk-Sharing in Social Networks.” American Economic Review, vol. 104, no. 1, Jan. 2014.
Ambrus A, Mobius M, Szeidl A. Consumption Risk-Sharing in Social Networks. American Economic Review. 2014 Jan;104(1).
Published In
American Economic Review
Publication Date
January 2014
Volume
104
Issue
1
Related Subject Headings
- Economics
- 15 Commerce, Management, Tourism and Services
- 14 Economics