The demand for insurance against common shocks

Abstract : In recent years, index-based insurance has been offered to smallholder farmers in the developingworld to protect against common shocks such as weather shocks. Despite their attractive properties, these products have met with low demand. We consider the frequent situation where farmers are members of groups with common interests. We show that this creates strategic interactions among group members in deciding to insure that reduce the demand for insurance for two reasons. One is free riding due to positive externalities on other group members when a member chooses to insure. The other is potential coordination failure because it may not be profitable for a risk-averse member to insure if the other members do not. As a consequence, we argue that the demand for insurance against common shocks could increase if the insurance policywere sold to groups rather than to individuals.
Type de document :
Article dans une revue
Journal of Development Economics, Elsevier, 2014, 106, pp.227-238
Liste complète des métadonnées

https://halshs.archives-ouvertes.fr/halshs-00879617
Contributeur : Cerdi Etudes & Documents - Publications <>
Soumis le : lundi 4 novembre 2013 - 14:11:22
Dernière modification le : jeudi 11 janvier 2018 - 06:17:18

Identifiants

  • HAL Id : halshs-00879617, version 1

Collections

Citation

Vianney Dequiedt, Alain De Janvry, Elisabeth Sadoulet. The demand for insurance against common shocks. Journal of Development Economics, Elsevier, 2014, 106, pp.227-238. 〈halshs-00879617〉

Partager

Métriques

Consultations de la notice

361