The crowding-out effect of formal insurance on informal risk sharing: An experimental study

• 成果类型: Article
• 署名作者: Lin, Wanchuan; Liu, Yiming; Meng, Juanjuan
• 署名单位: Peking University; Pennsylvania Commonwealth System of Higher Education (PCSHE); University of Pittsburgh
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2014.03.004
• 发表日期: 2014
• 页码: 184-211
• 关键词: Informal risk sharing; insurance; Crowding-out effect; altruism

摘要

This paper investigates the crowding-out effect of formal insurance on informal risk-sharing arrangements via theory and laboratory experiment. Our model and simulation predict that the crowding out of private transfers is often more than one-for-one and will reduce the total risk coverage. Furthermore, the existence of a moderate degree of altruism exaggerates the crowding-out effect, especially when there is an ex-ante income inequality. These predictions are mostly supported by the laboratory experiment, except that the crowding-out effect is not more than one-for-one, and hence the total risk coverage is not significantly reduced by formal insurance. (C) 2014 Elsevier Inc. All rights reserved.