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Risk taking and sharing when risk exposure is interdependent

Barr, Abigail; Owens, Trudy; Perera, Ashira

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Authors

ABIGAIL BARR Abigail.Barr@nottingham.ac.uk
Professor of Economics

TRUDY OWENS trudy.owens@nottingham.ac.uk
Associate Professor

Ashira Perera



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
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.

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