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Does Voluntary Risk Taking Affect Solidarity? Experimental Evidence from Kenya

Strobl, Renate and Wunsch, Conny. (2017) Does Voluntary Risk Taking Affect Solidarity? Experimental Evidence from Kenya. WWZ Working Papers, 2017 (12). Basel.

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Abstract

In this study we experimentally investigate whether solidarity, which is a crucial base for informal
insurance arrangements in developing countries, is sensitive to the extent to which individuals can influence their risk exposure. With slum dwellers of Nairobi our design measures subjects’ willingness to share income with a worse-off partner both in a setting where participants could either deliberately choose or were randomly assigned to a safe or a risky project. We find that only a subgroup of subjects
reduces willingness to give when risk exposure is a choice. Responses are limited to donors in the risky project, whereas donors in the safe project do not adjust their willingness to give. This difference in behaviour can be explained by differential giving in the absence of choice. Lucky winners with the risky project show a particularly high degree of solidarity with unlucky losers compared to donors and partners assigned to the safe project when they face risk for exogenous reasons. The possibility of free
project choice removes these differences in generosity and we show that this is driven by attributions of responsibility for neediness. Our results suggest that crowding out of informal support might be less severe than suggested by the studies from Western countries and the evidence on formal insurance from developing countries.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Arbeitsmarktökonomie (Wunsch)
12 Special Collections > WWZ Publications > WWZ Discussion Papers and Working Papers
UniBasel Contributors:Strobl, Renate and Wunsch, Conny
Item Type:Working Paper
Publisher:WWZ
Number of Pages:43
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Language:English
Identification Number:
  • handle: RePEc:bsl:wpaper:2017/12
Last Modified:20 Jun 2018 09:22
Deposited On:07 Mar 2018 11:55

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