Risk taking and sharing when risk exposure is interdependent

Barr, Abigail; Owens, Trudy; Perera, Ashira

Abstract

© 2020 Elsevier B.V. Using a specially designed experiment, we investigate whether and how interdependence in risk exposure, i.e., risk taking by some members of a potential risk sharing group affecting not only their own but also their co-members' risk exposure, affects both risk taking and ex post sharing. The experimental subjects were Sri Lankan small-holders who face interdependent risk and share when neighbors fall on hard times in everyday life. We find that the Sri Lankan farmers reward socially responsible risk taking and, under some circumstances, punish socially irresponsible risk taking. Their behavior is consistent with socially responsible risk taking being cost-dependent, although, here, the statistical evidence is inconclusive. Finally, social responsibility in risk taking and ex post sharing do not appear to be substitutes, rather, they appear to be co-determined.

Citation

Barr, A., Owens, T., & Perera, A. (2020). Risk taking and sharing when risk exposure is interdependent. Journal of Economic Behavior and Organization, 176, 445-460. https://doi.org/10.1016/j.jebo.2020.04.011

• Journal Article Type: Article
• Acceptance Date: Apr 12, 2020
• Online Publication Date: Jun 16, 2020
• Publication Date: Aug 1, 2020
• Deposit Date: Apr 17, 2020
• Publicly Available Date: Dec 17, 2021
• Journal: Journal of Economic Behavior and Organization
• Print ISSN: 0167-2681
• Electronic ISSN: 2328-7616
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 176
• Pages: 445-460
• DOI: https://doi.org/10.1016/j.jebo.2020.04.011
• Keywords: Economics and Econometrics; Organizational Behavior and Human Resource Management
• Public URL: https://nottingham-repository.worktribe.com/output/4300237
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S0167268120301244
• Additional Information: This article is maintained by: Elsevier; Article Title: Risk taking and sharing when risk exposure is interdependent; Journal Title: Journal of Economic Behavior & Organization; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.jebo.2020.04.011; Content Type: article; Copyright: © 2020 Elsevier B.V. All rights reserved.