Risk Sharing Relations and Enforcement Mechanisms

Abstract

The authors investigate whether available enforcement mechanisms affects who shares risk with whom in sub-Saharan Africa by applying dyadic regression analysis to data from a lab-type experiment, surveys and a genealogical mapping exercise. During the experiment participants were invited to form risk sharing groups under three enforcement mechanisms: external, intrinsic, and extrinsic, i.e., social sanctioning. Dyads similar in age and gender or who belong to the same economic community-based organizations (CBOs) are more likely to share risk. However, when social sanctioning is possible, co-members in economic CBOs withdraw from group formation and co-religion and marriage ties come to the fore. An earlier version of this paper was published as CSAE working paper 2008-14