@article{1f19422d8391439c81d5a354495c2dbd,
title = "Informal insurance in social networks",
abstract = "This paper studies bilateral insurance schemes across networks of individuals. While transfers are based on social norms, individuals must have the incentive to comply. We investigate the structure of self-enforcing insurance networks. Network links play two distinct and possibly conflictual roles. They act as conduits for both transfers and information; affecting the scope for insurance and the severity of punishments upon noncompliance. Their interaction leads to a characterization of stable networks as suitably {"}sparse{"} networks. Thickly and thinly connected networks tend to be stable, whereas intermediate degrees of connectedness jeopardize stability. Finally, we discuss the effect of discounting on stability.",
keywords = "Informal insurance, Norms, Reciprocity network, Risk sharing, Social networks, Sparseness, Stable networks",
author = "Francis Bloch and Garance Genicot and Debraj Ray",
note = "Funding Information: Keywords: Social networks; Reciprocity network; Risk sharing; Norms; Informal insurance; Sparseness; Stable networks ✩ A first draft of this paper was written while Genicot and Ray were visiting the London School of Economics; we thank the LSE for their hospitality. Ray is grateful for funding from the National Science Foundation under grant No. 0241070. We are grateful for comments by seminar participants at CSIC (Barcelona), Cergy, CORE, Essex, Helsinki LSE/UCL, Oxford, Royal Holloway and University of Maryland and audiences at the NEUDC in Montr{\'e}al, the AEA Meetings in Philadelphia, the SED in Budapest, conferences on networks and coalitions in Vaxholm and Guanajato, and the Conference in tribute to Jean-Jacques Laffont in Toulouse. Antoni Calvo-Armengol was extremely supportive of this research and we are grateful for his encouragement and constructive comments. This paper is dedicated to his memory. * Corresponding author.",
year = "2008",
month = nov,
doi = "10.1016/j.jet.2008.01.008",
language = "English (US)",
volume = "143",
pages = "36--58",
journal = "Journal of Economic Theory",
issn = "0022-0531",
publisher = "Academic Press Inc.",
number = "1",
}