ASFEE 6 in Paris

Tuesday 16
Cooperation

› 13:40 - 14:05 (25min)
› Amphi Durand
Solidarity and conditional cash-transfers for risk-exposure
Cécile Bazart  1, *@  , Julie Rosaz, Marc Willinger  2@  
1 : Laboratoire Montpelliérain d'Économie Théorique et Appliquée  (LAMETA)  -  Website
Centre international de hautes études agronomiques méditerranéennes [CIHEAM], Institut national de la recherche agronomique (INRA) : UR1135, CNRS : UMR5474, Université Montpellier I
34960 Montpellier cedex 2 -  France
2 : Laboratoire Montpelliérain d'Économie Théorique et Appliquée  (LAMETA)  -  Website
Université Montpellier I
34960 Montpellier cedex 2 -  France
* : Corresponding author

We investigate a simple solidarity game in which protected agents can provide protection to exposed agents through cash-transfers. In a preliminary stage, subjects earned a fixed cash amount by participating in a real effort task. In the next stage their earning was equally split between a blocked account and a current account. Half of the participants were exposed to an "unfair" background risk: with probability p an exposed subject (E-subject) lost her amount on her blocked account. In contrast, protected subjects (P-subjects) kept the whole amount on their blocked account with certainty. Next, each E-subject was randomly paired with a P-subject, on a one-to-one basis. At this stage each P-subject had to decide about the level of his cash-transfer to the E-subject with whom he was paired. We consider three variants or the cash-transfer institution: (i) conditional cash-transfer: each P-subject decides how much to transfer ex ante top the E-subject. The transfer is implemented only if the bad state occurs; (ii) ex post transfer: after observing the state of nature, each P-subject decides how much to transfer to the E-subject in case the bad state occurs; (iii) flexible conditional cash-transfer: same as (i) but the P-subject is allowed to revise the amount chosen ex ante if the bad state obtains.

 


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