Using data from an experiment conducted in 70 Colombian communities, we investigate who pools risk with whom when trust is crucial for enforcing risk pooling arrangements. We explore the roles played by risk attitudes and social networks. Both empirically and theoretically, we find that close friends and relatives group assortatively on risk attitudes and are more likely to join the same risk pooling group, while unfamiliar participants group less and rarely assort. These findings indicate that where there are advantages to grouping assortatively on risk attitudes those advantages may be inaccessible when
trust is absent or low. (JEL C93, O12, O18, Z13)
"Risk Pooling, Risk Preferences, and Social Networks."
American Economic Journal: Applied Economics,
Microeconomic Analyses of Economic Development
Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
Economic Sociology; Economic Anthropology; Social and Economic Stratification