Do informal transfers induce lower efforts? Evidence from lab-in-the-field experiments in rural Mexico

Alger, Ingela, Juarez, Laura, Juarez-Torres, Miriam and Miquel-Florensa, Josepa (2016) Do informal transfers induce lower efforts? Evidence from lab-in-the-field experiments in rural Mexico. IAST working paper, n. 16-34, Toulouse

[img]
Preview
Text
Download (1MB) | Preview

Abstract

How does informal risk sharing affect incentives to avoid risk? While moral hazard is expected under formal insurance, theory suggests that the incentive effects of informal risk sharing are ambiguous: internalization of the external effects of transfers on others may reduce or enhance incentives to avoid risk. To study this issue, which is particularly relevant for developing economies, we designed a novel real-effort lab experiment and conducted it in 16 small villages in rural Mexico. We find that subjects internalize the effects of transfers enough for the presence of transfers to significantly increase effort compared to autarky situations.

Item Type: Monograph (Working Paper)
Language: English
Date: February 2016
Place of Publication: Toulouse
Uncontrolled Keywords: informal insurance, effort, moral hazard, free-riding effect, empathy effect
JEL codes: C91 - Laboratory, Individual Behavior
D64 - Altruism
O12 - Microeconomic Analyses of Economic Development
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 14 Mar 2018 15:14
Last Modified: 20 Nov 2018 12:51
OAI ID: oai:tse-fr.eu:30163
URI: http://publications.ut-capitole.fr/id/eprint/23527

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year