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Pré-Publication, Document De Travail Année : 2015

Voluntary Contributions to a Mutual Insurance Pool

Résumé

We study mutual-aid games in which individuals choose to contribute to an informal mutual insurance pool. Individual coverage is determined by the aggregate level of contributions and a sharing rule. We analyze theoretically and experimentally the (ex ante) efficiency of equal and contribution-based coverage. The equal coverage mechanism leads to a unique no-insurance equilibrium while contribution-based coverage develops multiple equilibria and improves efficiency. Experimentally, the latter treatment reduces the amount of transfers from high contributors to low contributors and generates a "dual interior equilibrium". That dual equilibrium is consistent with the coexistence of different prior norms which correspond to notable equilibria derived in the theory. This results in asymmetric outcomes with a majority of high contributors less than fully reimbursing the global losses and a signi cant minority of low contributors less than fully defecting. Such behavioral heterogeneity may be attributed to risk attitudes (risk tolerance vs risk aversion) which is natural in a risky context.
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Dates et versions

halshs-01243256 , version 1 (14-12-2015)

Identifiants

  • HAL Id : halshs-01243256 , version 1

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Louis Lévy-Garboua, Claude Montmarquette, Jonathan Vaksmann, Marie Claire Villeval. Voluntary Contributions to a Mutual Insurance Pool. 2015. ⟨halshs-01243256⟩

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